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

  2. Welcome to TPS Welcome to TPS Overview of 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 Federal Oversight Design of TPS Quality Assess. Report Data End Let’s begin with an Overview

  3. Overview Welcome to TPS Overview of TPS • 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. Federal Oversight Design of TPS Quality Assess. Reports Data End How does this work?

  4. Overview Cont. Welcome to TPS Overview of TPS • 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. Federal Oversight Design of TPS Quality Assess. Report Data End

  5. Overview Cont. Welcome to TPS Overview of TPS • 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. Federal Oversight Design of TPS Quality Assess. Report Data End “Inspect what you expect”

  6. Overview Cont. Welcome to TPS Overview of TPS FederalOversight • 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. Design of TPS Quality Assess. Report Data End

  7. Overview Cont. Welcome to TPS Overview of TPS • 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. Federal Oversight Design of TPS Quality Assess. Report Data End Now, for more details on Federal oversight.

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

  9. Federal OversightCont. Welcome to TPS Overview of TPS • 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. Federal Oversight Design of TPS Quality Assess. Report Data End

  10. Federal Oversight Cont. Welcome to TPS Overviewof TPS • 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. FederalOversight Design of TPS Quality Assess. Report Data End

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

  12. Federal Oversight Cont. Welcome to TPS Overviewof TPS FederalOversight Core Measures of UI Tax Design of TPS Quality Assess. Report Data End

  13. Federal OversightCont. • 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.

  14. Federal Oversight Cont. Welcometo TPS Overviewof TPS FederalOversight • The flow of TPS data: TPS Reviewer Design of TPS State Administrator Quality Assess. Report Data Federal Oversight Regional Office National Office End Congress Next, more detail on the design of TPS.

  15. Design of TPS Welcometo TPS Overview of TPS FederalOversight • 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. Design of TPS Quality Assess, Report Data End Let’s look at this step by step.

  16. Design of TPS Cont. Welcome to TPS Overviewof TPS • 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. Federal Oversight Design of TPS 1 Quality Assess. 2 3 4 Report Data 5 End 6 7 8 9 10 11 12 13

  17. Welcometo TPS Design of TPS Cont. Overviewof TPS FederalOversight • Several methodologies are used: • Computed Measures • Program Reviews • Systems Reviews • Sampling Design of TPS Quality Assess. Report Data End Next, we will discuss Computed Measures.

  18. Design of TPSCont.Computed Measures Component Welcometo TPS Overview of TPS Federal Oversight Design of TPS COMPUTED MEASURES Quality Assess. Report Data End

  19. Design of TPS Cont. Welcome to TPS Overviewof TPS • 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. Federal Oversight Design of TPS Quality Assess. Report Data End

  20. Design of TPS Cont. Welcometo TPS Overviewof TPS FederalOversight • Computed Measures • TPS reviewers have access to automated, “Computed Measures” data via the following link: www.ows.doleta.gov/unemploy/tps.asp. • Note that the SUN system also provides State-specific data. This will be discussed during “Reporting Data”. Design of TPS Quality Assess. Report Data End

  21. Design of TPS Cont. Welcome to TPS Overviewof TPS FederalOversight • 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. Designof TPS Quality Assess. Report Data End

  22. Design of TPS Cont.Program Reviews Welcometo TPS Overviewof TPS Federal Oversight ProgramReview Design of TPS Quality Assess. Report Data End

  23. Design of TPSCont.Program Reviews Welcometo TPS Overviewof TPS • Program Reviews provide context – a look at the UI tax system as a whole • Program Reviews consist of: • Systems Reviews • Sampling Federal Oversight Designof TPS Quality Assess. Report Data End

  24. Design of TPS Cont.Program Reviews: Systems Reviews Welcometo TPS Overviewof TPS • 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”. Federal Oversight Design of TPS Quality Assess. Report Data End

  25. Design of TPS Cont.Program Reviews: Systems Reviews Welcometo TPS Overviewof TPS FederalOversight • 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? Major Internal Controls: Design of TPS Quality Assess. Report Data End

  26. Design of TPS Cont.Program Reviews: Systems Reviews Welcome to TPS Overviewof TPS FederalOversight • 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? Major Internal Controls: Design of TPS Quality Assess. Report Data End

  27. Design of TPS Cont.Program Reviews: Systems Reviews Welcome to TPS Overview of TPS FederalOversight • 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? Major Internal Controls: Design of TPS Quality Assess. Report Data End After a review of each tax function controls, small samples are examined.

  28. Design of TPS Cont.Program Reviews: Sampling Welcometo TPS Overviewof TPS • 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. Federal Oversight Design of TPS Quality Assess. Report Data End

  29. Design of TPSCont.Program Reviews: Sampling Welcometo TPS Overviewof TPS FederalOversight • 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. Design of TPS Quality Assess. Report Data End

  30. Design of TPS Cont.Program Reviews: Sampling Welcome to TPS Overviewof TPS FederalOversight • 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 1st q reports are delinquent. • Examine 60 a few months later for actions taken. Design of TPS Quality Assess. Report Data End

  31. Design of TPS Cont.Program Reviews: Sampling Welcome to TPS Overviewof TPS FederalOversight • 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 1st q. • Review 60 at the end of the quarter for accuracy in processing. Design of TPS Quality Assess. Report Data End

  32. Design of TPS Cont.Program Reviews: Sampling Welcome to TPS Overviewof TPS FederalOversight • 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. Design of TPS Quality Assess. Report Data End

  33. Quality Assessment Welcome to TPS Overviewof TPS FederalOversight • 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. Design of TPS Quality Assess. Report Data End

  34. Quality Assessment Cont. Welcome to TPS Overviewof TPS Federal Oversight Program Reviews Possible Outcomes Design of TPS Quality Assess. Report Data End

  35. Quality AssessmentCont. Welcome to TPS Overviewof TPS • 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 Federal Oversight Design of TPS Quality Assess. Report Data End

  36. Quality AssessmentCont. Welcometo TPS Overviewof TPS FederalOversight • 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 Design of TPS Quality Assess. Report Data End

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

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

  39. Report Data Cont.Sampling Path Welcometo TPS Overviewof TPS FederalOversight Design of TPS Quality Assess. Report Data End 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 Welcometo TPS Overview of TPS FederalOversight Design of TPS Quality Assess. Report Data End 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 Welcometo TPS Overviewof TPS Federal Oversight Design of TPS Quality Assess. Report Data End Select a Year and Quarter and you will see the states’ 581 Report. Select the 581 option and it will lead to this screen.

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

  43. Welcometo TPS Links Overviewof TPS FederalOversight • TPS Universe and Sampling Details • TPS Small Universes and Sample Sizes • TPS Guide to Writing an Annual Report • TPS and Tax Contacts List Design of TPS Quality Assess. Report Data End