Leverage Partnerships to Meet Year-End Challenges
Year-end challenges are always at the height of discussion in the payroll community. Issues range from wage and tax reconciliations, to completion and distribution of Forms W-2 and 1095-C, the earned income tax credit, and preparing for the first payroll of the new year. The tasks are all critical to a successful year-end, but it all begins with partnership, planning, and organization.
Know Your Partners
Year-end issues can arise if key partnerships are not identified and a consistent workflow and collaboration established. Key internal business partners that have roles and responsibilities important to the data integrity and processing of the Forms W-2 and 1095-Cs include, but are not limited to, the following:
- Payroll tax
- Global mobility
- Payroll technology support
As companies vary in their organizational structures, additional partners may need to be consulted throughout the process.
The identification of key partners, while important, is only the start of the process. Developing a business partner matrix and responsibilities and assignment matrix or Responsible, Accountable, Consulted, and Informed chart (RACI) will help ensure an effective workflow process. The RACI will provide a high-level viewpoint of the deliverables and tasks. The matrix should be created in August to allow adequate time to review with your business partners to ensure accurate contact information, tasks, and responsibilities are covered and to identify any gaps.
Create a Project Plan
Although a RACI is a beneficial asset in identifying roles and responsibilities, a more detailed project plan will be the key to scaling back the challenges and issues. A payroll team member should be designated to maintain the project plan and facilitate update meetings. The plan should be scaled to concisely show the stages of year-end and allow for ease of identification of ownership and timing in the process for each task (see Table 1).
As your business partners and payroll team will utilize this project plan to ensure all tasks are completed and on time, the plan should be drafted for review and circulated for feedback in July or August. You will want to ensure that all tasks, timing, and assignees are reviewed and any updates or changes made. A session on lessons learned should also be conducted at the conclusion of year-end. February would be the best time, as W-2s are out the door but the process and any issues are still at the forefront of everyone’s thoughts.
The lessons learned should be reviewed as you are creating the project plan to identify any new tasks that should be added, and/or any changes to current tasks or assignees and timing.
Establish the Process
Once you have the project plan reviewed and approved by the payroll team and business partners, a process should be established for the project flow. Best practices include setting biweekly meetings beginning in September with the task assignees and key stakeholders and transitioning to weekly meetings in November. The presence of all partners in one meeting when a few might only have limited tasks can impact the efficiency of the meeting. Depending on the attendance level you can look at having a separate meeting combining some of the partners with less tasks or with processes that are dependent on each other.
The project plan filtered for upcoming tasks and deliverables should be circulated the week prior to the meeting to request updates and provide a reminder to the assignees. Updates can also be conveyed in the meetings, but make sure to allow for time to discuss any issues. Issues that appear to be significant and require a more in depth discussion should be taken off line and a separate meeting set up with involved parties.
Clear and concise communication is key to ensuring everyone is working together and within the timeline. Create a summary status update form and send this to payroll and business partner leadership and the project team. The status update should include key deliverables, percent complete by category, and status (green, yellow, red), as well as any issues identified and potential resolution or follow-up required.
Best practices from an audit and risk perspective will always include establishing controls. The RACI and project plan will identify key workflow and tasks that should include an official signoff by the assignees and stakeholders. The utilization of an automated tool for loading of control sheets with support and signoff is often ideal; however, manual controls can also be utilized in the absence of automation.
Microsoft Excel or Word programs can be used to create a list of the steps required to complete a task, with sections for identifying issues and resolution, date of completion, and signoff by processor and reviewer. Data integrity testing and wage and tax balancing are good examples of tasks that will benefit from having control documents to ensure completion, accuracy, and provide an audit trail of execution and review. The controls would be in addition to operating procedures that should be created to identify the step process for balancing and testing, etc.
Closing the Gap
As legislation, business partners, and systems change, there are always going to be challenges to year-end with every size company and payroll team. The key to continued success is ensuring you leverage your internal and, in some cases, external partnerships and establish a structure for execution.
The key elements to manage year-end challenges will provide consistent identification of roles and responsibilities, tracking for tasks and any issues, clear and concise communication, and control to ensure successful completion of year-end (see Chart 1). Frame the plan, execute, and follow through with feedback from partners throughout the process and address any issues during the journey.
Year-End Beyond W-2s
Most of the focus of year-end is on W-2s and 1095-Cs. However, ensure you are also planning for the first paycheck of the new year. A checklist for changes that need to be made to 401(k)s, deferred compensation, tax rates, etc., will be beneficial in confirming all updates and any testing required are completed before the first paycheck is processed.
Once again, a “lessons learned” session is always a valuable tool to continue to improve the efficiency of your year-end process. Create a form to send to all business partners and the project team to capture issues that need to be addressed for the next year as well as feedback on the pros and cons of the current process. Year-end changes every year, and new challenges will arise. It is how we approach the challenges and execute our plans that will lead to a successful completion.
Nicole Hoffert, CPP, is Vice President-Tax Manager for Wells Fargo Global Payroll Services and a member of the Board of Contributing Writers for PAYTECH.