PAYROLL ACCOUNTING OVERVIEW - PAYROLL ACCOUNTS RECEIVABLE - 8593

(Revised: 09/2020)

Whenever an employee is overpaid, the State Controller's Office (SCO) processes an adjustment notice to notify the employee of the amount overpaid.  The SCO will send a Notice of Payroll Accounts Receivable (PAR) to the agency/department.

 

The PAR contains the following information: 

 

• Total and gross overpaid amount of the salary
• Payment type
• Amount of overpayment of the employer’s share of contributions for employees’ retirement, OASDI, and other benefits
• Employee deductions that will be recovered by the SCO
• Amount of the overpayment to be recovered from the employee
• Collection method, i.e., payroll deduction or agency collection

The gross amount and state share amounts of benefits of the PAR will be entered as a credit to expenditures, Account 51XXXXX (Legacy Account 9000) and a debit to Accounts Receivable-Abatements, Account 1200100 (Legacy Account 1311). See SAM section 10504. The PAR represents salary overpayment and will show the amount to be collected from the employee. The PAR is an open file pending full recovery. The recovery from the employee can be through payroll deduction or agency collection. The amount collected from the employee will be transferred to the department appropriation and/or fund.

For overpayments collected directly from the employee by agency collection, see SAM section 8593.1.

For overpayments collected through payroll deduction, see SAM section 8593.2.

The SCO will make the following Journal Entries for payroll accounts receivable:

• The ARO Notice of Transfer (TC38) records the total state share and employee deduction on the PAR Notice.
• The APO Notice of Transfer (TC-38) records the amount of the employee payroll deduction.
• The APC Notice of Transfer (TC-38 or TC-35) is a manual correction to the APO.

Note: A reversal to an overpayment is also identified as an ARO (TC-38) and is titled as Notice of Payroll Accounts Receivable Reversal on the PAR Notice.