Incorrect staff member paid in electronic payment

Question

An incorrect staff member was paid in the last pay cycle (due to incorrect staff name provided to our payroll team)

It was paid via time billing, processed through payroll, paid via electronic payments in group payment / STP reported / ABA through banking portal.

The staff member is not working/cannot be adjusted in the next pay run etc - so they have returned the funds in full to our bank.

What is the correct process to reverse this invalid pay (the hours, super, tax etc) that is currently recorded against this staff member (and reported to ATO),

and then how do i reconcile in banking against return funds.

If i reverse the pay, or if i process negative pay via process payroll, it records as cash? And if i do negative timesheet it sits in process payroll as a negative? I don't understand which is correct method or what to do next in either case.

Please help!!

isaiah_c · Answer

Hi SalArc,
&nbsp;
To address this situation, please follow these steps:
&nbsp;

Record the Refund:

Record a receive money transaction for the refund given by the employee. This step ensures that the funds returned are reflected in your accounts.

&nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; 2. Reconcile the Bank Transaction:
&nbsp;

Match the receive money transaction to the corresponding bank feed transaction (payroll) to complete the reconciliation process. This will help keep your banking records accurate.

&nbsp; &nbsp; &nbsp; &nbsp;
&nbsp; &nbsp; &nbsp; &nbsp; 3. Process the Reversal:
&nbsp;

Reverse the incorrect pay run in your payroll system. It is normal for this reversal to be automatically recorded as cash. This ensures that your payroll records are updated to reflect the reversal. For detailed guidance, here's a link on how to reverse a pay run: Fixing a pay.

&nbsp;
Regards,
Sai
&nbsp;
&nbsp;

salarc · Answer

Thanks Sai.&nbsp;I'm not sure I'm much clearer unfortunately&nbsp;&nbsp;In receive money..What do i actually record/allocate the funds to??&nbsp;Do i just fill out the pay and allocate to the 1-1000 account as a $627 non tax reportable amount..&nbsp;Or am i meant to allocate as per the original wages paid (image below)I can record the 15.00 and 7.5 hours to acc 6-1000, and I can do the PAYG tax withholding to 2-2005..&nbsp;but I cannot record the super guarantee anywhere - it makes the transaction out of balance..?Or does all those allocations captured/completed when i complete the reversal of the pay?&nbsp;&nbsp;

princess_r · Answer

Hi SalArc,
&nbsp;
Since we're not accountants and can't give financial advice, it's best to check with your accountant for specific guidance on which account to allocate the refund to.
&nbsp;
Cheers,
Princess

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