Public school districts in Illinois must submit a wage report to IMRF after every payroll or each month. IMRF will use the reported amount of IMRF earnings to tell the district how much money needs to be paid to IMRF, to cover both employee and employer contributions.
Sometimes, the amount that IMRF expects the district to pay may differ by a few cents from what’s predicted on the Payroll Liabilities page in SchoolInsight Financials. Like all payroll liabilities, you should always record the payment as the exact amount that will be withdrawn from your bank account, even if that leaves you with a non-zero liability balance.
To handle the small liability balance that’s caused by differences in the rounding, we recommend that you create a journal entry to adjust your expenditures and zero out the liability balance.
Of course, if the number in SchoolInsight differs significantly (+/- $0.10) from the number in IMRF, that’s a sign of a bigger setup problem. In that case, you should reach out to the SchoolInsight Financials support team for help. These journal entries should only be used if the difference can be attributed to rounding.
You may choose:
In both methods, when creating a custom payment, you have the choice of which liability account’s payment to adjust. You should pick a liability account in fund 50 or 51 (whichever your district uses for IMRF expenditures). This will allow for a simple two-line journal entry, which both the liability and expenditure account in the same fund.
Option A: One journal entry after every payment
This method clears the liability balance to $0.00 every month, but requires creating a journal entry after every payment that has a rounding difference. The liability payment will match exactly what was actually paid, and the journal entry will fix the liability balance.
Example 1: IMRF wants $500.44 cents. SchoolInsight predicts $500.41 (IMRF > SchoolInsight)
On the Payroll Liabilities page, make the payment with a custom amount of $500.44. It has the following effects:
- Debit the liability account $500.44
- Credit the asset account $500.44
- The remaining liability balance will be -$0.03
On the General Journal page, record a journal entry with the following characteristics:
- Date: Same as the payroll run date.
- Payee: IMRF [the same vendor that is linked to the IMRF payroll items]
- Adjustment Type: None or Regular Adjustment (either is fine)
- Debit the expenditure account $0.03
- Credit the liability account $0.03
Because the journal entry is tied to the vendor, the Previous Balance on the Liabilities page will be updated to include the additional $0.03, making the ending balance $0.00.
Your bank reconciliation will show one transaction of $500.44, which will match the $500.44 cent line on your bank statement.
Example 2: IMRF wants $500.44 cents. SchoolInsight predicts $500.47 (IMRF < SchoolInsight)
On the Payroll liabilities page, make the payment with a custom amount of $500.44. It has the following effects:
- Debit the liability account $500.44
- Credit the asset account $500.44
- The remaining liability balance will be $0.03
On the General Journal page, record a journal entry with the following characteristics:
- Date: Same as the payroll run date.
- Payee: IMRF [the same vendor that is linked to the IMRF payroll items]
- Adjustment Type: None or Regular Adjustment (either is fine)
- Debit the liability account $0.03
- Credit the expenditure account $0.03
Because the journal entry is tied to the vendor, the Previous Balance on the Liabilities page will be updated to include the additional -$0.03, making the ending balance $0.00.
Your bank reconciliation will show one transaction of $500.44, which will match the $500.44 cent line on your bank statement.
Note: When the IMRF < SchoolInsight payment, after you complete the Journal Entry mentioned above, your payroll run liabilities page will say “Partially Paid” instead of Paid.
Option B: One journal entry at the end of the year
This method has you carry a small liability balance from month to month, which you will zero out with one journal entry at the end of the year. You will see this running balance both on the liabilities payment page and on the balance sheet until the journal entry at the end of the year is complete.
Example: In the July payroll, IMRF wants $500.44, but SchoolInsight predicts $500.47 (IMRF < SchoolInsight)
To make sure the payment amount will reconcile with your bank statement, you record a “custom amount” payment of $500.44, leaving a liability balance of $0.03 remaining.
On the August payroll run, the IMRF wages are the same, so again IMRF wants $500.44 and SchoolInsight predicts $500.47 for this run. However this time, SchoolInsight will actually predict the total liability as $500.50 because the $0.03 liability rolled over from July. Again, record a “custom amount” liability payment of $500.44. This time the remaining liability balance will be $0.06.
If the pattern stayed exactly the same, you would end the year with a $0.36 IMRF liability balance. You can wipe this rounding difference away by creating a journal entry to zero out the liability and affect expenditures instead.
In reality, the rounding differences are likely to change as hourly workers may work different hours in each pay period, some positions may not be paid during the summer, and substitutes may come and go. These may sometimes result in IMRF expecting a higher amount and sometimes expecting a lower amount.If the end result is a positive liability balance (IMRF < SchoolInsight), you need to:
- Debit the IMRF liability account
- Credit an IMRF expenditure account
If the end result is a negative liability balance (IMRF > SchoolInsight), you need to:
- Debit an IMRF expenditure account
- Credit the IMRF liability account
Because this journal entry does not affect any asset accounts, the Adjustment Type can be “None” or “Regular Adjustment.” It won’t appear on the bank reconciliation either way.