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NPR 9620.1A
Effective Date: May 17, 2017
Expiration Date: May 17, 2027
Printable Format (PDF)

Subject: Payroll (Revalidated with Change 1)

Responsible Office: Office of the Chief Financial Officer

| TOC | ChangeLog | Preface | Chapter1 | Chapter2 | Chapter3 | Chapter4 | Chapter5 | Chapter6 | Chapter7 | Chapter8 | AppendixA | AppendixB | AppendixC | ALL |

Chapter 2. Payroll Electronic Processing

2.1 Agency Requirements

2.1.1 It is NASA policy to effectively use electronic processing to the extent possible to accomplish payroll objectives (see Section 2.2, Management Objectives). The electronic processing of NASA payroll transactions, distribution of payroll costs, and update of NASA accounting systems and information systems require coordination of management efforts and system processing within NASA and among other agencies and financial institutions. All of the following will work together for an effective payroll process:

a. Collection and processing of personnel data from HR actions to calculate pay consistent with grade, position classification, and other individual entitlements.

b. A payroll processing mechanism to receive all the data and do the electronic calculations.

c. Interaction with OPM to ascertain the rates for pay, benefits, and other personnel information.

d. Receipt of T&A data each pay period to be used to calculate base pay and pay for leave categories.

e. Information on employee benefit and other deductions to calculate deductions from pay and contributions from NASA to pay for these items.

f. Import of the payroll labor cost file into the Agency's labor system for Centers' review and reconciliation of labor cost distribution.

g. Electronic interfaces from and to other systems for receiving payroll data and processing output for accounting and information needs and electronic banking.

h. Record keeping, reconciliation of data, and reporting.

2.2 Management Objective

2.2.1 Any system or systems used in NASA will meet the objectives of NASA payroll management which are:

a. Prompt payment in the proper amount to all entitled persons in compliance with laws, regulations, and legal decisions.

b. Payment by EFT in accordance with the Debt Collection Improvement Act of 1996 and Management of Federal Agency Disbursements, 31 CFR pt. 208, except where a waiver has been granted in accordance with 31 CFR ยง 208.4.

c. Proper accounting for and disposition of all authorized deductions from gross pay.

d. Adequate control over retention and disposition of all payroll-related documents.

e. Preparation of adequate and reliable payroll records. Individual pay records for all personnel will be maintained to show gross compensation (including allowances by type and amount), deductions (including allotments) by type and amount, and net pay for each pay period. As a part of NASA's financial management system, these records will be maintained by calendar year, leave year, tax year, or fiscal year, to support:

(1) Management information needs.

(2) Planning, preparation, execution, and review of the budget.

(3) Internal and external reporting requirements.

f. Effective communication with employees on payroll matters.

g. Adequate control over all phases of pay, leave, and allowances.

h. Effective interaction of the payroll with the general ledger, personnel, cost accounting functions, and other NASA work efforts requiring payroll information.

i. Adherence to Internal Control Methods (NPR 9010.3).

j. Collection and processing of payroll data consistent with a standard of accuracy, timeliness, complete reliability, and consistency.

k. Provision of an audit trail to facilitate audits and reconcile and validate data.

2.3 Functions for Payroll Processing

2.3.1 NASA's policy promotes efficiency of automation and electronic banking through the following seven functions, needed to process payroll. NASA uses an integrated system for the payroll processing to provide the data necessary for NASA systems and reporting. Discussion of policies, procedures, and systems related to payroll follow.

2.3.2 Benefits Administration Function. OPM is NASA's selected service provider for the employee benefits information system. The information system is self-service for employees. The NSSC administers the Federal benefits and retirement programs for NASA's civilian employees. NASA employees will (unless exempted by waiver) use the automated system to enter discretionary payroll and personnel transactions such as Federal and state tax withholding, discretionary allotments, and home address. Time and Attendance (T&A) Processing Function. Policy. A T&A system will be used to record employees' time in a pay and non-pay status for purposes of computing pay, leave, and allowances. NASA's T&A system will:

a. Process records so payroll data includes Work Breakdown Structure (WBS), to facilitate the use of NASA's Financial Classification Structure (FCS) when processing payroll labor cost for transmission to NASA's core financial system. This is instrumental for management purposes such as Full Cost Reporting.

b. Meet the objectives of this NPR.

c. Be used by NASA employees to enter T&A transactions.

d. Interface data and files to and from the payroll processing systems and other systems whenever feasible to avoid duplication of entry.

e. Adopt procedures, checks, edits, and on-line verification as necessary to ensure the accurate processing of transactions. NASA uses a T&A system for recording and reporting T&A. OCFO provides oversight, and Center CFO personnel or HR personnel provide data entry and system operation. The data entered in the T&A system is electronically interfaced through NASA-managed middleware:

a. To the labor distribution system for management of NASA financial codes for labor distribution.

b. To NASA's external payroll service provider's payroll system to calculate payroll.

c. From NASA's external payroll service provider's payroll system to NASA's labor distribution system to determine amounts for labor distribution financial coding based on the payroll calculations.

d. Finally, from the labor distribution system to the NASA core financial system with cost updates complete with financial coding for labor distribution.

2.3.3 Leave Processing. The recording of accrued leave taken by an individual is handled through the T&A system. NASA uses automated leave processing systems for the following:

a. Calculation and maintenance of all activities associated with determination of proper leave balances for all types of leave including advances, accruals, usages, forfeitures, limitations, and transfers.

b. Application of current period leave accruals and leave charges to each employee's available leave balances, leave transfers, donations to leave banks or individuals, adjustments to leave balances for restored leave, Equal Employment Opportunity (EEO) settlements, and similar after-the-fact situations.

c. Processing of leave forfeitures and carryovers for each employee.

d. Performing all the functions needed for handling leave in this NPR.

e. Updating through a single entry process.

f. Permitting the maintenance of leave records for each employee. The T&A system handles the automated T&A process for leave actually taken by category. Performance of the leave maintenance function for each employee resides with NASA's external payroll service provider.

2.3.4 Pay Processing. The payroll processing system comprises the central processing system for calculating payroll. It is the repository of all information collected from the systems and functions discussed in this section as needed to process payroll and is the supplier of record keeping information and report information. The payroll system for NASA will be the only central payroll processing system used by NASA. In case of a service provider, a Standard Service Level User agreement will be executed to provide payroll processing for all of NASA through a uniform payroll system. The payroll system will:

a. Calculate gross pay, deductions, and net pay, employee, and employer contributions for each employee on an effective pay period basis.

b. Compute gross pay as the sum of each rate of pay times the number of units related to it, minus retirement annuity offsets, if applicable, plus all appropriate allowances and/or other gross pay components, classify and total deductions, subtract total deductions from gross pay, and apply formulas or utilize tables to determine employer contributions required for certain payroll taxes and benefits.

c. Provide data meeting NASA's payroll informational needs. This includes NASA's criteria for accounting records, reporting purposes, and payroll administration at the employee level and aggregate level.

d. Have the necessary capability to perform the entirety of the functions in this chapter for payroll processing and meet the objectives of payroll in conjunction with other NASA systems and processes in accordance with this NPR.

e. Permit the reconciliation between NASA financial systems and other systems receiving data from the payroll processing system.

f. Allow for meeting the Fund Control Objectives of NASA (see NPR 9470.1, Budget Execution) to be met before payments are disbursed. NASA's external payroll service provider provides full payroll processing services including most of NASA's payroll processing related external reporting requirements. However, the ALDS provides supplemental processing for detail cost calculations. Overall, NASA adopted its external payroll service provider's system for the following:

a. Payroll Functions.

(1) Payroll accounts maintenance.

(a) Leave and pay processing.

(b) Disbursement of pay.

(c) Back pay administration.

(d) Error correction and adjustment to and from NASA's external payroll service provider's system.

(e) Off-cycle payments.

(f) Audit and research of payroll data.

b. Debt Management.

(1) Salary overpayments.

(2) Collection actions.

(3) Debt reporting and tracking.

(4) Garnishment and legal actions.

c. Payroll Accounting.

(1) Treasury/bank liaison.

(2) Lost/stolen checks and bonds.

(3) Accounting reconciliations for disbursements (through Treasury).

(4) Determination of amounts for payroll obligation and accruals for posting into the NASA core financial system through the labor distribution system.

d. Taxes and Collections.

(1) Federal.

(2) State.

(3) City.

(4) Local.

(5) Includes processing of all forms for personnel tax administration such as IRS Form W-2, Wage and Tax Statement and IRS Form W-4, Employees Withholding Allowance Certificate.

e. Employee Benefit Payment Processing.

(1) Retirement.

(2) Life Insurance.

(3) NASA Employee Benefits Association.

(4) Federal Employees Health Benefits.

(5) TSP and Thrift Loans.

(6) Employee direct deposits including for allotments.

f. The following are handled through NASA's external payroll service provider's system through a series of electronic one-way interfaces from NASA's external payroll service provider to the recipient organization with the exception of Employee Express and the OPM-selected Federal employee long-term health care insurance provider, where there is a two-way data exchange from and to these entities.

(1) EFT through Treasury to handle most payments.

(2) Non-EFT payments distributed via printed check for disbursement through Treasury.

(3) Retirement and insurance disbursements to OPM.

(4) Central Personnel Data File for update of personnel information to OPM.

(5) Employee self-service information to and from Employee Express.

(6) Automated group health changes to OPM Electronic Health Benefits system.

(7) Unemployment taxes for Unemployment Compensation.

(8) Data to the Equal Employment Opportunity Report System.

(9) Long-term health care information to and from the long-term health care provider.

(10) Employee health insurance reconciliation interface with Health Benefit Enrollment Reconciliation.

(11) Saving bond file with the Federal Reserve.

(12) Social Security Administration files for child support enforcement.

(13) State of California Directory of New Hires and Quarterly Wage Data.

(14) IRS Form W-2 file with the Internal Revenue Service (IRS).

g. Interfaces between NASA's external payroll service provider's system and NASA information systems are documented in Interface ICDs, per OCIO policy.

2.3.5 Labor Cost Distribution. General. The labor distribution process in summary is the distribution of civil servant employee's labor cost plus associated overhead type cost (fringe benefits, paid leave, etc.) by financial classification structures. Due to full cost, NASA's labor distribution also will fairly and equitably allocate costs to projects and programs. NASA has a standard labor distribution system, the ALDS, used by all Centers, NSSC, and Headquarters. Policy. NASA policy for labor distribution is:

a. To provide one labor distribution process as an integral part of the payroll system.

b. To accumulate cost information for use in budgeting and controlling costs, performance measurement, determining fees and prices for services, assessing programs, and management decision making. Labor costs are an integral part of determining the cost of doing business.

c. To accumulate cost to report workforce/labor information for full cost purposes, to understand where people, work and the related cost and for full cost accounting and management.

d. To accumulate work units by cost object (e.g., organization and activity) and responsible Center and to provide that data to other systems performing cost accounting functions.

e. To calculate, distribute, and update NASA payroll so labor cost is recorded consistent with the benefiting activities as reflected in NASA's Financial Classification Structure (FCS). This information is needed for NASA full cost management, personnel management, and budget development and management purposes.

f. To ensure the labor distribution process distributes civil servant employees labor cost plus associated overhead type cost (fringe benefits, paid leave, hours associated with travel, etc.) by NASA's FCS, which includes the work breakdown structure (WBS), Fund, Internal Order, Cost Center, and Object Class for transmissions to NASA's core financial system.

g. To validate the data against anticipated results and format it for submission to the core financial system.

h. To submit the data for posting to other NASA financial systems and HR systems.

i. To provide the capability of reconciling the data electronically with the payroll processing system and other systems as necessary.

j. To handle NASA accruals according to the following policy for Personnel Compensation, Personnel Benefits, and Related Payments (Object Class Code (OCC) 11, 12, 13, and 14).

(1) Gross compensation (OCC 11), including overtime, will be accrued through the end of each month. A labor distribution system may be used to distribute actual charges to cost accounts and to credit accounts payable. A month-end record cutoff will be made if practicable. If a record cutoff is not feasible or the labor distribution to cost accounts does not vary significantly from payroll period to payroll period, the cost distribution of a representative preceding payroll or the total annual payroll to date may be used in determining the current accrual. Labor cost accruals will be distributed to the appropriate benefiting project(s) and functions. Merit bonuses and awards are accrued in the month in which the Center OCFO is notified of the liability for payment.

(2) Benefits (OCC 12 and 14), including NASA contributions to Social Security, retirement funds, the TSP, and group health and life insurance programs will be accrued in the same manner as gross compensation. Other benefits, such as relocation-related real estate costs and personnel allowances, will be accrued in the month in which notification of the liability for payment is received. (Reference NPR 9060.1, Accrual Accounting - Revenue, Expenses, and Program Costs).

(3) Payments to OPM for reemployed annuitants and severance pay for former employees (OCC 13) will be accrued in the same manner as gross compensation.

(4) Recruitment and relocation bonuses and retention allowances will be accrued in the month in which the financial servicing Center is notified of the requirement for payment. NASA's external payroll service provider's system does not offer labor distribution functionality fully adequate for NASA purposes. To supplement this, NASA utilizes ALDS:

a. To receive T&A data from the T&A system and process it to assign project codes associated with gross payroll cost for T&A hours, hour types, adjustments, and rollup cost for various additives (e.g., fringe benefits).

b. To process T&A data so it can be electronically interfaced to NASA's external payroll service provider's system for payroll processing.

c. To receive the payroll as processed by NASA's external payroll service provider and further process the data for cost allocation purposes.

d. As a source system for updating the core financial system for General Ledger Records and Business Objects purposes.

e. As a source for any other NASA system needing the data.

f. To check for fund availability to meet the fund control objectives of NASA (see NPR 9470.1).

2.3.6 Reporting, Reconciliation, and Records Retention Functions. NASA payroll-related systems will provide reporting that:

a. Is accessible and formatted as required to satisfy regulatory, managerial, and accounting information requirements including full-cost requirements.

b. Is generated at specific time intervals or upon request, including reports spanning fiscal years, calendar years, or other time periods to meet user needs and other requirements.

c. Produces user outputs including all vouchers and reports necessary to recognize payroll expenses and authorize related disbursements.

d. Includes external reports including those required by Treasury, OPM, the Department of Labor, the Federal Retirement Thrift Investment Board, and others.

e. Includes managerial reports including control reports used by human resources/payroll office staff members, as well as reports used by others such as supervisors. The systems involved in payroll processing will provide reconciliation functionality to compare data between systems. For ease of reconciliation:

a. All data for the payroll system is to be recorded based on a one-time single point of entry. The data may be entered directly into the payroll system or updated through an electronic interface with the payroll system.

b. All data from the payroll system to other systems is to be updated through an electronic interface with the payroll system.

c. Data between systems is to be electronically reconciled to flag any differences and procedures developed to make corrections with notification to or through the efforts of the responsible employees. For record retention, the payroll function will:

a. Provide for maintaining, storing, and permitting ready retrieval of employment and payroll data for the time period required by law. The system will be nimble enough to handle timeframes and record keeping requirements that differ depending on the subject matter.

b. Abide by regulations concerning the handling of records created within the Federal Government as written by the National Archives and Records Administration (NARA), 36 CFR 1220-1290. Providers of NASA payroll-related reports, reconciliation, and record retention.

a. The following will be provided by NASA's external payroll service provider:

(1) Reporting, reconciliation, and record retention for automated data processed through the payroll system.

(2) Processing through electronic interfaces to report payroll data to the following key NASA systems receiving payroll data:

(a) NASA core financial system, General Ledger, and the Agency's reporting systems for financial reporting and management.

(b) NASA's external payroll service provider's data is reconciled electronically with the data updated in NASA systems. NASA's external payroll service provider is responsible for performing reconciliations to other systems outside of NASA.

(3) Record retention and management of payroll data.

b. NASA organizations provide the reporting, reconciliation, and record retention function for:

(1) Payroll data processed through their systems.

(2) Hard copy documents processed through NASA.

| TOC | ChangeLog | Preface | Chapter1 | Chapter2 | Chapter3 | Chapter4 | Chapter5 | Chapter6 | Chapter7 | Chapter8 | AppendixA | AppendixB | AppendixC | ALL |
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