Module 7

Question 1

Business continuity plan first step:

Answer 1

To obtain top management commitment to developing
and implementing the plan when needed.

Question 2

Form I-9 must be retained:

Answer 2

For the later of three years after the date of hire or one
year after the date of termination.

Question 3

Form W-2 Box 1 must equal:

Answer 3

The total of all Forms W-2 Box 1 must equal Line 2
from all Forms 941 filed during the year.

Question 4

Form W-2 Box 2 must equal:

Answer 4

The total of all Forms W-2 Box 2 must equal Line 3
from all Forms 941 filed during the year.

Question 5

How is pay frequency governed?

Answer 5

State regulations govern the frequency employers pay
employees, when final wage payments must be made,
and the lag-time between the end of the pay period
and pay date.

Question 6

Payroll documentation includes:

Answer 6

Payroll documentation should include: a confidentiality
statement; table of contents; an overview of the payroll
system; and step-by-step procedures.

Question 7

Payroll documentation should be:

Answer 7

Payroll documentation should be simple enough to
allow an employee to perform payroll functions with
little or no assistance.

Question 8

Privacy rights aregoverned by:

Answer 8

Federal and state laws, as well as company policy.

Question 9

Retention of tax returns:

Answer 9

Copies of tax returns and the date supporting the tax
return must be retained for at least 4 years after the
return’s due date or payment date whichever is later.

Question 10

Retention of worked hours records:

Answer 10

Under the Fair Labor Standards Act, the record of
hours worked each day/week must be retained for at
least 3 years after the date of the last entry.

Question 11

Service level agreements record:

Answer 11

The understanding about services, priorities,
responsibilities, guarantees, and warranties between
the parties.

Question 12

Timecard retention:

Answer 12

Time cards are supplemental records that must be
retained for at least 2 years after the last date of entry.

Question 13

What is acomputer interface?

Answer 13

The point where two distinct data-processing elements
meet and pass data between the systems.

Question 14

What is a master file?

Answer 14

The collection of data describing the employees of a
company. Government agencies do not require a
master file be kept in any specific format.

Question 15

What is a transit routing number?

Answer 15

A nine-digit number used to identify a financial
institution. For direct deposit, the employee’s bank is
the Receiving Depository Financial Institution (RDFI).

Question 16

What is batch processing?

Answer 16

The coding and collecting of items processed into
similar groups to allow the items to be input into a
payroll system in a group.

Question 17

What is escheat?

Answer 17

The process of transferring abandoned wages to the
appropriate state agency.

Question 18

What is the ODFI?

Answer 18

The ODFI (Originating Depository Financial Institution)
is the financial institution a company provides its ACH
files.

Question 19

What is the RDFI?

Answer 19

The RDFI (Receiving Depository Financial Institution)
is the financial institution posting direct deposit
amounts into an employee’s checking or savings
account.

Question 20

Companies should use what two types of control functions?

Answer 20

validity edits and control edits.

Question 21

What do validity edits show?

Answer 21

whether or not the data entered meet the requirements set forth by the company. For example, the system may notify the user if the data are outside the scope of the company limits.

Question 22

What do control edits show?

Answer 22

whether or not the data entered are what the user intended to enter. Control edits generally use a system of interim control totals called batches.

Question 23

Batch control steps:

Answer 23

1. Compute totals from the documents used for data entry.
2. Produce computer-generated totals of the data entered.
3. Compare the totals obtained from the documents to the totals obtained from the report.
4. Research and correct the differences.

Question 24

Penalties for faulty record keeping

Answer 24

The willful failure to comply with the record keeping requirements under the IRC is a misdemeanor punishable by a fine of up to $25,000 ($100,000 for corporations) and/or imprisonment for up to 1 year, plus the costs of prosecution.

Question 25

The four steps you should take as soon as a data breach occurs are:

Answer 25

1. Contain—secure your systems/data to prevent any future unauthorized access 2. Assess—locate the source of the data breach and information compromised 3. Notify—contact law enforcement, the IRS, state taxation agencies, and victims 4. Review—conduct risk assessment to identify and correct vulnerabilities. Develop or update cybersecurity policies and train all stakeholders, including third-party vendors.

Question 26

Steps to Create a Business Continuity Plan

Answer 26

Step 1: Obtain top management commitment. Step 2: Establish a planning committee. Step 3: Perform a risk and business impact analysis. Step 4: Establish priorities for processing and operations – critical needs. Step 5: Determine recovery strategies. Step 6: Perform data collection. Step 7: Organize/document a plan and procedures. Step 8: Develop testing criteria and procedures. Step 9: Test the plan. Step 10: Approve the plan.

Question 27

What records should be kept for 4 Years?

Answer 27

All employment tax records 940, 941, W-2, etc, including EIN, amounts and dates of wage payments, tax deposits, and W-4 forms. Payroll records, deductions agreements, taxes withheld Dates employee was absent and received pay for attendance via 3rd party or contingency plan

Question 28

What records should be kept for 3 Years?

Answer 28

Name, as it appears on the employee’s social security card Complete home address Date of birth, if under age 19 Sex and occupation The beginning of the employee’s workweek (time and day) Regular rate of pay for overtime weeks, the basis for determining the rate, and any payments excluded from the regular rate Hours worked each workday and workweek Straight-time earnings Overtime premium earnings Additions to and deductions from wages for each pay period Total wages paid for each pay period Date of payment and the pay period covered Collective bargaining agreements (CBAs) Certificates authorizing the employment of industrial homeworkers, minors, learners, students, apprentices, and handicapped workers Records showing total sales volume and goods purchased

Question 29

What records should be kept for 2 years?

Answer 29

Timecards Work Schedules Wage Rate Tables Order, billing, and shipping records Records of additions or deductions from wages Basic employment and earnings records supporting the data for each employee’s hours of work, basis for determining wages, and wages paid (e.g., time cards) Order, shipping, and billing records for customers, shipping and delivery records, and customer billings Records substantiating any additions to or deductions from employees’ wages Wage rate tables and piece rate schedules Worktime schedules establishing the hours and days of employment

Question 30

What records should be kept for 1 year?

Answer 30

EEOC (Equal Employment Opportunity Commission) (1 Year): Personnel files, application forms, and records related to involuntary termination.

Question 31

What is de-identified health information?

Answer 31

De-identified health information neither identifies nor provides a reasonable basis to identify an individual. There are no restrictions on the use or disclosure of de-identified health information.

Question 32

All of the following amounts are posted to an employee's earnings record EXCEPT: A. deductions B. net pay C. gross pay D. pay rate

Answer 32

D. pay rate To meet IRS and DOL requirements, all compensation and deductions must be included in the employee’s master file records.

Question 33

A company deposited $100,000.00 of its tax liability ten days after the due date. What amount is the penalty for failure to make timely deposits?

Answer 33

The correct answer is: $5,000.00. Late deposit penalties are assessed when the deposit is made after the due date. The penalty is 5% of the deposit not made on time when the deposit is made more than five days after but not more than 15 days of the due date.

Question 34

Which of the following documents must be retained for a maximum of four years? A. Work time schedules B. Billing records C. Wage rate tables D. The amount and date of an employee's wage payments

Answer 34

D. The amount and date of an employee's wage payments Tax related documents, such as the tax returns and amount and date of an employee's wage payments, are retained for at least four years.

Question 35

A company willfully failed to withhold social security and Medicare taxes from the salaries of its five employees. What may occur? A. The maximum penalty that can be applied is 75% of the taxes due. B. The three-tier penalty for failure to file correct information returns applies. C. Certain officers of the corporation can be held personally responsible for the payment of the taxes. D. The employees will not be required to pay social security and Medicare taxes.

Answer 35

C. Certain officers of the corporation can be held personally responsible for the payment of the taxes. Using the Trust Fund Recovery Penalty the IRS can personally penalize certain officers of the corporation for nonpayment of the taxes.

Question 36

System Selection Process Steps

Answer 36

Build a Project Team Needs Analysis --Document the current system and its problems. --Define the requirements a new payroll system must meet. Request for Proposal / Request for Quotation Select a System

Question 37

Steps Required to Implement a System

Answer 37

Preparing for Implementation Training Team Members and the Payroll Staff Perform the Gap Analysis

Question 38

Checking inputs or outputs against predetermined constraints is called a(n): A. validity edit. B. compliance edit. C. external audit. D. reconciliation.

Answer 38

A. validity edit.

Question 39

Time cards & schedules retention

Answer 39

2 years

Question 40

Payroll records retention

Answer 40

3 years

Question 41

FMLA records retention

Answer 41

3 years

Question 42

Child labor records retention

Answer 42

3 years

Question 43

W-4 forms retention

Answer 43

4 years

Question 44

OSHA logs retention

Answer 44

5 years

Question 45

ERISA benefit records retention

Answer 45

6 years

Question 46

I-9 forms retention

Answer 46

3 after hire OR 1 after termination (whichever is later)

Question 47

EEOC personnel files retention

Answer 47

1 year after termination

Question 48

EEO-1 reports retention

Answer 48

1 year