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U.S. Dept. of Labor’s Tax Performance System TPS Reviewer Training.

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Presentation on theme: "U.S. Dept. of Labor’s Tax Performance System TPS Reviewer Training."— Presentation transcript:

1 U.S. Dept. of Labor’s Tax Performance System TPS Reviewer Training

2 Welcome to TPS Scope of Training: Overview of TPS Federal Oversight Federal Oversight Programs Design of TPS Computed Measures Systems Review of State’s Internal Controls Sampling of Tax’s Outputs Assessing Quality Reporting Data End - links Overview of TPS Welcome to TPS End Report Data Quality Assess. Design of TPS Federal Oversight Let’s begin with an Overview

3 Overview TPS is a performance management tool for States and the Federal government. TPS Handbook 407 provides a set of instructions for evaluating quality of State UI tax operations. How does this work? Welcome to TPS End Reports Data Quality Assess. Design of TPS Federal Oversight Overview of TPS

4 Overview Cont. You examine and evaluate your State’s UI tax system and TPS is your tool. Identify any problem areas: Weaknesses in State’s system of internal controls Samples of each tax function’s outputs to check for accuracy Report this data into web-based system once each year “SUN System”. Work with State and Regional partners to improve tax operation. Welcome to TPS Overview of TPS Federal Oversight Design of TPS Quality Assess. Report Data End

5 Overview Cont. What is the Federal role? Monitor States’ UI tax systems If problems are discovered, the Regional office works with the State to propose solutions. Receive a “State Quality Service Plan” for any improvements necessary. If Corrective Action is needed, monitor to ensure agreed-upon actions are taken. “Inspect what you expect” Welcome to TPS Overview of TPS Federal Oversight Design of TPS Quality Assess. Report Data End

6 Overview Cont. Ensure TPS is in place and operating as intended Once every four years, neighboring States and Region examine a State’s most recent CY TPS findings. “Federal Team Reviews” are organized and conducted by Regional staff. Team Reviews promote consistency in application of TPS between States. Team Reviews facilitate exchange of information and best UI tax practices between States. Ensures integrity of the TPS program. Welcome to TPS Overview of TPS Federal Oversight Design of TPS Quality Assess. Report Data End

7 Overview Cont. Report to Congress via Government Performance and Results Act (GPRA) Long term, five year plans For UI Tax, GPRA reports on the timeliness of new employer status determinations. Example: By 2012, at least 86.7% of new employer status determinations should be completed by the end of the quarter in which the employer became liable. Now, for more details on Federal oversight. Welcome to TPS Overview of TPS Federal Oversight Design of TPS Quality Assess. Report Data End

8 Federal Oversight The US DOL’s oversight system for UI tax, UI benefits and the validation of UI data is called “UI Performs”. TPSBAMBTQDV Welcome to TPS Overview of TPS Federal Oversight Design of TPS Quality Assess. Report Data End

9 Federal Oversight Cont. Several years’ of discussions with States and DOL resulted in “UI Performs”. State performance is measured by TPS, Benefit Accuracy Measure (BAM), Benefit Timeliness & Quality (BTQ), and Data Validation (DV). TPS is an examination of State tax operations using two aspects of performance: Timeliness and Quality. BAM is a statistical survey to determine the accuracy of paid and denied UI claims. BTQ is a quality review that provides an assessment of the adequacy of the State’s fact finding application of law, policy and written nonmonetary determinations. DV verifies the validity of the reports which are used for assessing performance of the State’s UI program. Welcome to TPS Overview of TPS Federal Oversight Design of TPS Quality Assess. Report Data End

10 Federal Oversight Cont. The Department has added emphasis on certain performance measures: “Core Measures”. Core Measures have been assigned certain “Acceptable Levels of Performance” (ALP). If scores fall below these levels, corrective action may be necessary. Note this is separate from the GPRA measures reported to Congress. Welcome to TPS Overview of TPS Federal Oversight Design of TPS Quality Assess. Report Data End

11 Federal Oversight Cont. UI Tax Core Measures 1. Timeliness  70% or more new employer status determinations must be made timely. 2. Quality  Less than four out of the thirteen tax functions sampled can fail. 3. Quality Over Time  No tax function can continue to fail for three successive years. Welcome to TPS Overview of TPS Federal Oversight Design of TPS Quality Assess. Report Data End Pass Fail

12 Federal Oversight Cont. Core Measures of UI Tax Tax TimelinessTax Quality Computed Measure Passes? At least 70% of determinations made within 90 days Samples Pass? Three or less fail out of 13 samples Samples Pass Over Time? A sample can not fail 3 successive years Welcome to TPS Overview of TPS Federal Oversight Design of TPS End Report Data Quality Assess.

13 Failure to conduct one or more TPS sample reviews also results in the need for corrective action (unless the universe is too small to sample or a temporary Federal waiver has been granted). Corrective Action Plans may be necessary if TPS is not conducted according to Federal guidelines as noted in TPS Handbook 407. Federal Oversight Cont.

14 The flow of TPS data: TPS Reviewer State Administrator Regional Office National Office Congress Next, more detail on the design of TPS. Welcome to TPS Overview of TPS Federal Oversight Design of TPS Quality Assess. Report Data End Federal Oversight

15 Design of TPS To measure tax performance, TPS examines the States’ major tax functions. Two different methodologies used: Computed Measures Program Reviews Systems Reviews Sampling At the end of each year, TPS findings and any recommendations are submitted. Let’s look at this step by step. Welcome to TPS Overview of TPS Federal Oversight Design of TPS Quality Assess, Report Data End

16 Design of TPS Cont. Every calendar year, TPS evaluates the timeliness and quality of State tax operations. The TPS reviewer examines 13 major tax functions once per CY. Experience Rating is only once every four years – see 407 Handbook for details. TAX FUNCTIONS EXAMINED STATUS DETERMINATION New Determinations Successor Determinations Inactivation's/ Terminations CASHIERING REPORT DELINQUENCY COLLECTIONS FIELD AUDIT ACCOUNT MAINTENANCE Report Processing Debits/Bills contributory Debits/Bills reimbursing Credits/Refunds Benefit Charging Experience Rating Welcome to TPS Overview of TPS Federal Oversight Design of TPS Quality Assess. Report Data End

17 Several methodologies are used: Computed Measures Program Reviews Systems Reviews Sampling Design of TPS Cont. Next, we will discuss Computed Measures. Welcome to TPS Overview of TPS Federal Oversight Design of TPS Quality Assess. Report Data End

18 Design of TPS Cont. Computed Measures Component TAX FUNCTIONS EXAMINED STATUS DETERMINATION -New determinations within 90 days -New determinations within 180 days -Successor determinations within 90 days -Successor determinations within 180 days CASHIERING-N/A REPORT DELINQUENCY -Timely reports - Reports secured within 90 days -Reports sec. or resolved within 180 days COLLECTIONS-Timely payments -Uncollectible -Accounts receivable FIELD AUDIT-Change in total wages -Contributory employers audited - Total wages audited (annualized) ACCOUNT MAINTENANCE -N/A End Report Data Quality Assess. Design of TPS Federal Oversight Overview of TPS Welcome to TPS COMPUTED MEASURES

19 Design of TPS Cont.  Computed Measures  We rely on existing reports that each State automatically submits every quarter.  Data are then computed and show performance in terms of:  Timeliness (Ex: percent of timely determinations)  Numbers (Ex: percent of debt declared un- collectable, percent of employers audited)  Data Validation program, under the UI Performs umbrella, ensures Federal definitions are used. Welcome to TPS Overview of TPS End Report Data Quality Assess. Design of TPS Federal Oversight

20 Design of TPS Cont. Computed Measures TPS reviewers have access to automated, “Computed Measures” data via the following link: Note that the SUN system also provides State-specific data. This will be discussed during “Reporting Data”. End Report Data Quality Assess. Design of TPS Federal Oversight Overview of TPS Welcome to TPS

21 Computed Measures At the end of the calendar year when evaluating the tax system, the Computed Measures should be factored into the mix. This will be demonstrated later in the presentation. Also, see examples of Computed Measures in Annual Reports in the Links page at the end of this tutorial. In addition to the Computed Measures’ data, on tax timeliness, information about tax quality is needed. Next, we will discuss TPS’ Program Reviews. Design of TPS Cont. Welcome to TPS Overview of TPS Federal Oversight Design of TPS Quality Assess. Report Data End

22 Design of TPS Cont. Program Reviews TAX FUNCTIONS EXAMINED Systems Reviews Examination of Internal controls which ensure: Samples To confirm that internal controls are working - examination of: STATUS DETERMINATION -Accuracy of new determinations -Accuracy of successor determins -Accuracy of inactive determinations -New determinations -Successor determinations -Inactive determinations CASHIERING Timeliness of remittance processing Employer remittances REPORT DELINQUENCY Accurate id of delinquent employers Take actions to secure/resolve rpt del Accounts w/ delinquent reports COLLECTIONS -Take actions to manage acts recv -Accounts receivable FIELD AUDIT -Ensure audits meet requirements -Completed audits ACCOUNT MAINTNANCE -Accuracy of contrib.rpt processing -Accuracy of billings -Accuracy of credits/refunds -Accuracy of benefit charging -Accuracy of experience rating -Active contributory accounts -Contrib./reimb. Accounts receivable -Accounts payable credits/refunds -Accounts due benefit charges -Employer experience ratings Program Review End Report Data Quality Assess. Design of TPS Federal Oversight Overview of TPS Welcome to TPS

23 Design of TPS Cont. Program Reviews Program Reviews provide context – a look at the UI tax system as a whole Program Reviews consist of: Systems Reviews Sampling Welcome to TPS Overview of TPS Federal Oversight Design of TPS End Report Data Quality Assess.

24 Design of TPS Cont. Program Reviews: Systems Reviews Systems Reviews are conducted once every four years unless the State has made system changes or problems have been discovered. They are the most time-consuming of TPS activities For each tax function, TPS conducts a thorough examination of the function’s Internal Controls & Quality Assurance systems. These controls are supposed to be in place, working together to ensure that the tax operation is producing accurate outputs. If controls are missing, the tax function is deemed to be “at risk”. End Report Data Quality Assess. Design of TPS Welcome to TPS Overview of TPS Federal Oversight

25 Design of TPS Cont. Program Reviews: Systems Reviews Handbooks For instance, does the status function have adequate and up-to-date handbooks and recorded instructions for staff to do its job? Training Does the collections unit provide training on the collections tools available to them? End Report Data Quality Assess. Design of TPS Federal Oversight Welcome to TPS Overview of TPS Major Internal Controls:

26 Design of TPS Cont. Program Reviews: Systems Reviews Supervisory Review Is the completed work of the Refunds/Credit staff subject to review by supervisors or others from time to time? Audit Trail Are field auditors required to examine employer source documents when examining payroll records and do the auditors provide documentation that this has been done? End Report Data Quality Assess. Design of TPS Federal Oversight Overview of TPS Welcome to TPS Major Internal Controls:

27 Design of TPS Cont. Program Reviews: Systems Reviews Authorized Individuals Does the State’s cashiering operation only allow certain individuals access to employer remittances? Checks & Balances Does the report delinquency unit have tracking systems to follow up when employers promise to submit delinquent reports? After a review of each tax function controls, small samples are examined. End Report Data Quality Assess. Design of TPS Federal Oversight Overview of TPS Welcome to TPS Major Internal Controls:

28 Design of TPS Cont. Program Reviews: Sampling Small Samples reviewed 1 x year, to ensure internal controls are working as intended. Reviews examine the work each tax unit did during the CY under review. State IT unit should be building the universe from which each sample will be selected. At specific times during the year, samples should be automatically extracted for review. End Report Data Quality Assess. Design of TPS Federal Oversight Overview of TPS Welcome to TPS

29 Design of TPS Cont. Program Reviews: Sampling Each of the tax functions’ universes should have 60 samples extracted (Exception of Cashiering). TPS reviewer should ensure that this is taking place! Out of 60, if 3 or more cases fail, the tax function does not have “reasonable assurance of quality”. With such a small sample, it is a rough guide (just a warning flag). If there is disagreement about the sample’s findings A second sample can be extracted. If an actual error rate is needed– see Handbook 407 on Expanded Sample. End Report Data Quality Assess. Design of TPS Federal Oversight Overview of TPS Welcome to TPS

30 Design of TPS Cont. Program Reviews: Sampling A Quick Run Through: Status Determinations All new, successor and inactivation determinations that have been made during the CY. Examine 60 each for accuracy. Cashiering Employer checks sent for the 2nd q of CY. Sample 500 checks for timeliness of deposit. Report Delinquency Employers whose 1 st q reports are delinquent. Examine 60 a few months later for actions taken. End Report Data Quality Assess. Design of TPS Federal Oversight Overview of TPS Welcome to TPS

31 Design of TPS Cont. Program Reviews: Sampling A Quick Run Through Cont. : Collections A one-day snapshot of active receivables. Review 60 a few months later for collections actions taken. Field Audits All audits completed 1, 2 and 3rd q of CY. Review 60 for adherence to auditing requirements. Account Maintenance Contribution Reports  A one day snapshot of active employers for the 1 st q.  Review 60 at the end of the quarter for accuracy in processing. End Report Data Quality Assess. Design of TPS Federal Oversight Overview of TPS Welcome to TPS

32 Design of TPS Cont. Program Reviews: Sampling A Quick Run Through Cont. : Debits/Bills Select one quarter and identify all contributing & reimbursing employers who owe money. Look at 60 contributions and 60 reimbursements - were the debits/bills processed correctly? Credits/Refunds Select one quarter and identify employers who are owed money. Look at 60 - were the credits or refunds established properly? Benefit Charges Identify all employers who have been charged for UI benefits. Review 60 charges to ensure accuracy. Experience Ratings Identify employers who are to receive experience rate notices. Examine 60 employer accounts to confirm accuracy of rates. End Report Data Quality Assess. Design of TPS Federal Oversight Overview of TPS Welcome to TPS

33 Quality Assessment Each sample will either pass a quality review or fail. There should be a correlation between a sample that passes and “no risk”, found in that tax function’s set of internal controls. Ex: Benefit Charge unit has controls in place = sample passes. If a sample fails, it could be related to problems (“risks”) in the tax function controls. Ex: Status unit has outdated manuals and little training = failed sample. End Report Data Quality Assess. Design of TPS Federal Oversight Overview of TPS Welcome to TPS

34 Quality Assessment Cont. Systems Reviews SamplesConsistency? No Risk FoundSample PassesConsistency No Risk FoundSample FailsInconsistency Risk FoundSample PassesInconsistency Risk FoundSample FailsConsistency Program Reviews Possible Outcomes End Report Data Quality Assess. Design of TPS Federal Oversight Overview of TPS Welcome to TPS

35 Quality Assessment Cont. When CY has ended, you produce an Annual Report by end of May Report identifies strengths and weaknesses SR findings – are there problems in State’s system of internal controls? Sampling – have samples failed test of accuracy? Computed Measures – are tax systems operating timely? Recommendations for improvement Goes to State administrator State and RO discuss problems and plans for improvement End Report Data Quality Assess. Design of TPS Federal Oversight Overview of TPS Welcome to TPS

36 Quality Assessment Cont. You have spent months and months evaluating State’s tax operations. As you come to conclusions, keep the tax units appraised – no surprises at end of year. National Office needs TPS data Data entry into SUN by March 31 of each year CY 1 enter data by March 31 of CY 2. Here is what the TPS Web Application Menu looks like End Report Data Quality Assess. Design of TPS Federal Oversight Overview of TPS Welcome to TPS

37 Report Data TPS Web Applications Menu Selecting the “Computed Measures” option will lead to these screens…. Place- holder Welcome to TPS Overview of TPS Report Data Quality Assess. Design of TPS Federal Oversight End

38 Report Data Cont. Computed Measures Path Selecting the Computed Measures options will lead you to these screens. End Report Data Quality Assess. Design of TPS Federal Oversight Overview of TPS Welcome to TPS Select the Report Type and Year. Then, Select either: Measures, Database Display Formulas. The states’ scores will be displayed. Or the actual data the state has entered will be displayed. Or the formulas will be displayed.…

39 Report Data Cont. Sampling Path End Report Data Quality Assess. Design of TPS Federal Oversight Overview of TPS Welcome to TPS Select the Sampling option and it will lead you to these screens. Select a year and then enter your sampling data.

40 Report Data Cont. Systems Review Path End Report Data Quality Assess. Design of TPS Federal Oversight Overview of TPS Welcome to TPS Select the Systems Review option and it will lead you to this menu. Select a year and enter your sampling data.

41 Report Data Cont. ET 581Contribution Report Path End Report Data Quality Assess. Design of TPS Federal Oversight Overview of TPS Welcome to TPS Select the 581 option and it will lead to this screen. Select a Year and Quarter and you will see the states’ 581 Report.

42 End Report Data Quality Assess. Design of TPS Federal Oversight Overview of TPS Welcome to TPS This concludes the TPS training presentation A list of links follows For further assistance, don’t hesitate to use the Contact List link to call your Regional and National Office colleagues!

43 Links TPS Universe and Sampling Details TPS Small Universes and Sample Sizes TPS Guide to Writing an Annual Report TPS and Tax Contacts List End Report Data Quality Assess. Design of TPS Federal Oversight Overview of TPS Welcome to TPS


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