To: DASACC Financial Contacts

From: Paul Carlson

Date: 8/04/05 1:44 p.m.

Subject: Payments

PROCESSING PAYMENTS TO EMPLOYEES OF OTHER AGENCIES

There are occasions when one agency needs to reimburse travel or other miscellaneous expenses to a current employee of another agency. That employee may have provided assistance to another agency or may be on an advisory board for another agency.

In this situation, the State Accounting – Address Book section will not establish a payable (search type PP) address book record in NIS to make payments to a State employee. The employee (search type E) address book record will be used.

NIS security over employee address book records (search type E) allows them to be seen and used only by the employee’s home agency. The agency needing to pay the employee will need to process a journal entry to record their expense. The debit side of the entry should be to the appropriate account number (business unit.object code) for the expense. The credit side of the entry should be to a balance sheet business unit (equal to a fund number of the employee’s home agency) with an object code of 132200 (Due from Government). The appropriate balance sheet business unit/fund will need to be obtained through contact with the accounting department of the employee’s home agency. This transaction will record the expense for the appropriate agency and will also transfer cash from that agency to the employee’s home agency. The employee’s home agency will then be responsible for processing a disbursement document for the employee debiting (charging) the same balance sheet business unit and object code 132200 as was previously credited by the paying agency. By using this coding, the home agency will have no budgetary consequences related to this payment. The journal entry and the disbursement document are independent transactions. The JE would normally process first so that cash is transferred to the home agency before the disbursement is made to the employee. The expending and home agencies will need to coordinate the processing of their transactions and the documentation to be maintained at each agency. The invoice number field of the disbursement document could be used as a means to cross-reference the payment to the JE number.

This process is considered a State Accounting policy and will be administered as such.

This policy does not apply to situations where an agency is paying another agency’s employee for true contractual services rather than just reimbursing expenses. In that situation, that relationship needs to be clearly communicated to the State Accounting -Address Book section. A separate vendor/payable record will be established because the employee is separately serving the State in a contractual capacity which requires separate tracking and potentially federal tax reporting. A remark should be included with the address book request in the ‘other’ field stating the employee will be providing contractual services. If the employee is being paid as a business with a different name or as a corporation, a W9 will need to be submitted as required for any other vendor/payable. The State Accounting – Address Book section would also establish a separate vendor/payable record to pay a former State employee since those address book records (search type X) are not open for statewide access. It should be pointed out that the IRS most likely will review the contractual relationship if an individual receives both a W-2 and a 1099 from the State. Thus, it is imperative that any agency paying a state employee 1099 reportable income must ensure a true contractual situation exists.

Agencies should not utilize the IBT process as a substitute for this policy procedure.

Please communicate and explain this policy to any of your employees that may be submitting address book record requests or processing payments. If State Accounting – Address Book section receives a request to establish a current State employee as a vendor/payable address book record, it will be denied unless the above process is followed. They will be directed to this policy as the procedure to follow to make the payments.