The employee compensation payment requirements are one of the areas tested during the annual fiscal and internal control practices procedures that are required by the Wisconsin Department of Public Instruction (DPI). Compensation agreements need to meet a number of specific requirements to be in compliance. The following is a list of these requirements:
- The agreements must be signed by BOTH a School representative and the employee prior to the first payment date under the contract.
- The agreements must include the compensation amounts.
- The schools must maintain documentation of employees electronically signing the agreements if electronic signatures are used.
To be in compliance, the agreements should also include the date range that the contract covers and they should be dated on the date they are signed.
In addition to these specific requirements, schools are required to provide employees with the dates that payroll will be paid prior to making any payments for the school year. This information can be included in the compensation agreements. Employees are required to be paid at least once every 31 days.
Pay rate changes that occur during the school year create additional documentation requirements. For all pay rate changes, one of the following must be provided to the employees before the change is made.
- Written notification of the change (in paper or electronically).
- A document signed by the employee agreeing to the pay change.
For an ongoing change, the written notification must include the date the change is effective and the increase or decrease for each paycheck including how the amount is calculated.
One-time payments such as bonuses fall into this category as well. If the pay change is a one-time payment, the written notification must include when the amount will be paid and how much the amount will be.
Schools can take an active role in preventing any non-compliance findings:
- Do a regular internal audit of a sample of compensation agreements.
- Review the agreements for the items listed above, and, if any missing components are noted, have them corrected as soon as possible.
- Ensure to have procedures documented for pay rate changes. When there are policies and procedures in place that detail the documentation requirements for bonuses paid, merit increases, etc., staff involved in the payroll process can ensure they are obtaining all of the necessary items.
- Review a sample of employees from payroll registers throughout the year. Total compensation paid for the payroll should be compared to the amount that is detailed in the compensation agreement. If any differences are found, they can be investigated and corrected.
Completing these procedures throughout the school year should help reduce any potential non-compliance findings by the auditors during the fall procedures. For more information, visit www.dpi.wi.gov/parental-education-options/choice-programs or contact your Hawkins Ash CPAs representative.
