0501 Overview

This chapter establishes the Department of Veterans Affairs’ (VA) financial policies regarding payroll accounting.

Key points covered in this chapter:

• VA’s payroll activities include entering employee information, maintaining and updating systems, monitoring data interfaces with the payroll provider, reconciling errors in payroll charges to VA’s appropriations, and reporting payroll expenses.
• Defense Finance and Accounting Service (DFAS) processes VA payroll transactions, except for VA’s Office of Inspector General (OIG) whose payroll is processed by Department of Agriculture’s National Finance Center;
• Financial Services Center (FSC) processes and reconciles accounting transactions related to payroll expenses; and
• VA reports payroll expenses as part of the annual financial statements.

0502 Revisions

See changelog.

0503 Definitions

Central Accounting Reporting System (CARS) – Handles accounting and reporting for all Federal agencies. CARS is the electronic system of record for the government’s financial data which provides streamlined agency reporting and supports governmentwide standardization.

Defense Civilian Pay System (DCPS) – System owned and operated by DFAS that is used to process payroll.

Fund Balance with Treasury (FBWT) – The aggregate amount of funds on deposit with Treasury, including general funds, deposit funds, trust funds, special funds, and revolving funds. FBWT is an asset of the VA and a liability of the General Fund of the Treasury. FBWT does not represent a net asset to the Government as a whole.

General Ledger (GL) – Provides a uniform chart of accounts and technical guidance for standardizing federal agency accounting.

Treasury Account Symbol (TAS) – An identification code assigned by Treasury, in collaboration with OMB and VA, to an individual appropriation, receipt, or other fund account.

0504 Roles and Responsibilities

Under Secretaries, Assistant Secretaries, Chief Financial Officers, Fiscal Officers, Chiefs of Finance Activities, Chief Accountants, and Other Key Officials (OKO) are responsible for ensuring compliance with the policies set forth in this chapter.

Servicing Human Resources (HR) Offices are responsible for entering and updating personnel record data in the HR system which interfaces with DCPS.

Servicing Payroll Offices are responsible for entering and updating pay impacting transactions in DCPS in accordance with documents submitted by employees or statutory requirement.

Employees are responsible for working assigned hours, entering leave requests for absence, submitting deductions, and verifying pay, deductions, leave and work schedules.

Timekeepers are responsible for entering Time & Leave (T&L) data subject to supervisor direction and certification.

Defense Finance and Accounting Service (DFAS) is VA’s designated payroll service provider responsible for payroll processing, disbursing pay, making appropriate deductions, and reporting expense to VA’s line of accounting.

Financial Services Center (FSC) is responsible for reconciling pay period salary expense, entering necessary adjustments, determining monthly accruals of salaries and benefits, providing financial reporting pay data and serves as the liaison for VA payroll operations management communications with the payroll service provider, DFAS.

0505 Policies

050501 General Policies

1. Under the E-Government Act of 2002, e-Payroll Initiative, Federal agencies’ payroll processing operations were consolidated among a few agencies. The Office of Management and Budget (OMB) selected DFAS to process VA’s payroll transactions. DFAS processes and disburses payments, and reports transactions to VA, Treasury, and taxing authorities using the Defense Civilian Pay System (DCPS).
2. VA will transmit HR, timekeeping and employee data to DFAS.
3. VA will recognize the full obligation for an incentive liability when the agreement is signed, including multi-year student loan awards and retention incentives. See Government Accountability Office (GAO) Publication B-325526 dated July 2014.
4. DFAS will calculate pay and other employee benefits and will generate salary payments in DCPS.
5. DFAS will provide VA details related to salaries and employee benefits paid as well as, leave accrued and used, Leave and Earnings Statement and W-2 data.
6. FSC will ensure that payroll transactions are interfaced to VA’s accounting system and that their effect is reflected in the General Ledger (GL).
7. FSC will reconcile each pay period’s accounting system data with VA’s Funds Balance with Treasury (FBWT) and DCPS.
8. FSC will post necessary adjustments to VA’s accounting system in a timely manner.
9. On a monthly basis FSC will reconcile payroll expense data recorded in the GL with VA accounting system records and Treasury balances using Treasury’s Central Accounting Reporting System (CARS). This reconciliation is performed by Treasury Account Symbol (TAS) for reporting purposes. Associated reporting adjustments are recorded to match CARS for unreconciled payroll items due to timing differences.

050502 Payroll Reporting

1. VA will comply with Office of Management and Budget (OMB) Circular A-136, Financial Reporting Requirements.
2. VA will adhere to Treasury Financial Manual Volume I, Chapter 4700, Agency Reporting Requirements for the Financial Report of the United States Government.
3. VA will report end of fiscal year employee salary and benefit accruals in accordance with Statement of Federal Financial Accounting Standards (SFFAS) No. 1, Accounting for Selected Assets and Liabilities, and will report salary expense in agency financial statements.
4. VA will accrue salaries and benefits for services rendered in the period but not yet paid. See VA Financial Policy Volume VI, Chapter 11, Employees’ Accrued Salaries and Benefits, for additional information.

0506 Authorities and References

• E-Government Act of 2002
• Federal Accounting Standards Advisory Board (FASAB) Handbook by Chapter – Statement of Federal Financial Accounting Standards (SFFAS) 1, Accounting for Selected Assets and Liabilities
• OMB Circulars, A-136, Financial Reporting Requirements
• Treasury Financial Manual Volume I, Chapter 4700, Agency Reporting Requirements for the Financial Report of the United States Government
• GAO Appropriations Law – decision search, B-325526, July 16, 2014
• VA Financial Policy Volume VI, Chapter 11, Employees’ Accrued Salaries and Benefits

0507 Rescissions

VA Financial Policy Volume III, Chapter 5, Payroll Accounting, approved in November 2020.

0508 Questions

Questions concerning this financial policy should be directed to the following points of contact: