Preparing your HR/payroll systems for end of financial year

The end of the 2013/14 financial year is fast approaching –
will your SAP systems be ready? Freya Purnell spoke to Marco Franse,
senior SAP HCM consultant with Presence of IT, about common pitfalls
companies face when preparing their systems and some specific issues to
cover off this year.
 

Common issues in preparing HR systems for end of year

When
it comes to SAP HR systems, one of the most important issues IT teams
should be aware of is that HR support packs follow a different cycle to
the support packs for other parts of the SAP system.

To ensure that everyone is on the same page (literally),
Franse recommends getting IT, finance and payroll staff together to
discuss the differences between support packs, support stacks and
synchronisation points, to ensure that in their planning for the year,
the correct support pack is installed for SAP HR.

“A lot of people go up to a certain stack, and that is
basically all the support packs across the different modules in SAP,
where SAP has checked and guaranteed the interdependency between them,”
Franse says. “What people don’t realise is that doesn’t necessarily
include the November HR synchronisation point, which you need as an
absolute bare minimum for Australia and New Zealand year-end.”

To avoid a mad rush to implement support packs during April
and May, ideally organisations should be planning from around November
to have the necessary upgrades in place prior to year-end.

“You need to start thinking about not just what type of
system and technical resources you need, but also your business
resources. Once everything has been done in development systems, the
business needs to validate this data, and we find that there is often a
lack of business resources to participate in that validation,” Franse
says.

“Where possible, organisations should make provision for a
fresh copy of their production environment, where they can do pre- and
post-support pack comparisons to ensure that nothing will go wrong with
support packs moving into the production environment.”

If that’s not possible, using data copy tools will enable
real employee data including payroll information to be copied back to
the test environment, so that proper testing can be carried out and
hopefully any surprises eliminated when the move to the production
environment is made.

Reconciliation is of course a crucial component of year-end
processes, and if organisations are running year-end reconciliation as
part of their regular payroll processes, rather than just a pay-to-pay
reconciliation, this should run much more smoothly.

“Once you have done that, you literally have to just go in
and run through the year-end process. By the time you get to year-end,
your payroll is balanced back to the listing report, to the payment
summary listing, and the termination payments listing,” Franse says.

To further streamline this process, Franse recommends ensuring one-off processes such as year-end are documented.

“We find that payroll departments will have their regular
payroll processes very well-documented and accessible, but the processes
that run only once a year, is not always documented,” he says.

“We encourage customers to either document their year-end
processes, or use a tool, such as the Presence of IT Process Workbench,
that allows you to take all your paper-based processes and build them
into SAP, so that even the one-off processes that you only run once a
year are captured, and you can attach process documents to it.”

Specific issues for 2013/14 financial year

The big ticket item this year when it comes to changes
affecting SAP HR/payroll systems is the introduction of the SuperStream
standards, which come into effect on 1 July 2014. Essentially, the
superannuation system is going paperless – meaning both payments and
contribution information need to be made to superannuation funds
electronically.

Businesses with 20 or more employees can start implementing
the SuperStream standard from 1 July 2014 and will have until 30 June
2015 to meet the requirements when sending superannuation contributions
on behalf of their employees in one of two ways, full end-to-end
implementation of the standard (channel A) or transitional arrangements
(channel B).

While the Australian Taxation Office, which is overseeing
the changes, is trying to alleviate confusion in the industry about the
requirements, there has certainly been an evolving picture about what
SAP customers need to do to prepare.

In April, SAP delivered the first part of their solution to
accommodate the SuperStream changes, but Franse says this solution does
not support the new standards end to end.

“The two main things that SAP won’t support at the moment is
the transformation of the file using XBRL, or the packaging and sending
over a secure method (ebMS 3.0/AS4),” he says.

“SAP has a report to extract the new member and contribution
information, extending the existing superannuation tables and providing
a couple of new tables. That will allow you to store all the additional
information now required, such as a unique superannuation identifier,
electronic service address, and ABN.”

The report, which is to be delivered in the next few weeks,
will also create the file in the SuperStream alternative file format
(csv) which can be used during the transitional period, scheduled to end
30 June 2017.

As every product within a superannuation fund will now have
its own unique superannuation identifier (USI), there will be a master
data cleansing effort required to ensure that employers have the
appropriate USIs for employee funds. The onus has been placed on
superannuation funds to provide members with this information, who in
turn will have to provide it to their employers.

“There is going to be an exercise to match this information
up to what has been configured in the SAP system, because that’s part of
the data that needs to go into the file that goes to the superannuation
funds via clearing houses or gateways,” Franse says.

Employers should also be speaking to their superannuation
fund or clearing house to find out whether the current electronic file
formats and payment methods they are using will be acceptable to the
fund during the the transitional period.

“Surprisingly, there are still quite a lot of employers out
there that are paying by cheque. If you have 20 or more employees, you
must send electronic payments and messages (in the approved format) by
30 June 2015 to meet your SuperStream obligation. The electronic payment
must be linked to the message via a unique payment reference number
that you or your agent working on your behalf has generated.

“Alternative file formats may be allowed if it’s agreed
between the employer and the trustee of the fund. So employers need to
start these discussions with them in terms of is the current file format
acceptable, and if not, is there any additional information that is
required.”

If employers are currently not using a clearing house, they
may also wish to speak to their default superannuation fund to see if
they can provide that service to simplify compliance with SuperStream,
or consider using a commercial clearing house to do the packaging of
electronic information.

“Although there is a transitional period, we tell our
customers to do whatever you can do now to get ready for SuperStream,
because it’s coming,” Franse says.

Other important changes relating to superannuation that
organisations should ensure their systems are prepared for include that
the current concessional superannuation contribution cap of $35,000,
which currently applies to anyone that is 60 and over, will also apply
for anyone that is 50 and over in the 2014/15 financial year.

And a final item to watch is that the Federal Government has
tabled draft legislation to delay the stepped increase of the
superannuation guarantee to 12 per cent.

“On 13 November 2013, the Government introduced the Minerals
Resource Rent Tax Repeal and Other Measures Bill 2013 into parliament.
The bill proposed to pause the SG charge percentage at 9.25 per cent for
the years commencing 1 July 2014 and 1 July 2015, and increase it to
9.5 per cent for the year starting on 1 July 2016, and then gradually
increasing it by 0.50 per cent each year until it reaches 12 per cent
for years on or after 1 July 2021. The bill did not become law, so super
will be increasing to 9.5 per cent as originally planned,” Franse says.

 

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