Mixed Deck — All ADP Topics Flashcards

What is a W-2c and when must it be issued?

Answer: A corrected W-2 issued when an error is discovered after the original W-2 was filed or furnished

Form W-2c corrects previously filed W-2 information and must be issued whenever errors in wages, taxes, or other reportable items are discovered after the original W-2 was furnished.

What is the Electronic Federal Tax Payment System (EFTPS) and how does it relate to ADP?

Answer: A U.S. Treasury system for making federal tax deposits electronically; ADP uses it to deposit taxes on behalf of clients enrolled in its tax filing service

EFTPS is the IRS's official electronic tax payment system, and ADP SmartCompliance uses it to make timely federal tax deposits on behalf of client employers.

What is an 'IP allowlist' in ADP access security and how does it protect the payroll system?

Answer: An IP allowlist restricts ADP system access to requests originating from approved IP addresses, preventing access from unauthorized or unknown network locations

Configuring an IP allowlist in ADP limits system access to trusted network addresses, reducing the risk of unauthorized access from external or unrecognized locations.

In ADP, what is a 'missed punch exception' and how should it be resolved?

Answer: A missed punch exception is flagged when an employee fails to record a required clock-in or clock-out; it must be resolved by a manager or payroll admin entering the correct time

Missed punch exceptions in ADP alert managers that a time record is incomplete; the manager or payroll administrator must manually enter the correct punch time to complete the record.

What is a payroll internal audit and which ADP reports are most useful for conducting one?

Answer: A systematic review of payroll processes, controls, and data accuracy; useful ADP reports include the Audit Trail, Payroll Register, New Hire Report, and Terminated Employee Report

A payroll internal audit uses ADP reports like the Audit Trail, Payroll Register, New Hire, and Terminated Employee reports to verify data integrity, authorization, and compliance.

How do you handle a payroll error after processing has completed?

Answer: Reverse the payroll batch and rerun it.

When a significant payroll error is discovered after processing has completed, the most direct and comprehensive solution is to reverse the entire payroll batch and then rerun it correctly. This method ensures that all affected calculations, deductions, and tax filings are accurately corrected within the system. While issuing a manual check or making corrections in the next run can address immediate payment issues, reversing and rerunning the batch provides a cleaner and more accurate record within the payroll system itself.

What happens in ADP if an employee's pay is insufficient to cover both a child support order and a creditor garnishment in the same pay period?

Answer: The child support order is paid first; the creditor garnishment receives remaining eligible funds

Child support orders take legal priority; if funds are insufficient to cover both, child support is fully satisfied first, and the creditor garnishment receives only the remaining garnishable amount.

What is the purpose of ADP's Audit Trail Report?

Answer: To log all changes made to employee records, pay rates, deductions, and payroll configurations, including who made the change and when

ADP's Audit Trail Report creates a time-stamped log of every change made to the payroll system, recording the user, date, and nature of each modification for compliance and fraud detection.

In ADP, which benefit type requires Section 125 Cafeteria Plan setup to allow pre-tax employee contributions?

Answer: Health Savings Account (HSA)

HSAs funded through payroll deductions via a Section 125 Cafeteria Plan are excluded from federal income, Social Security, and Medicare taxes.

In payroll reconciliation, what does 'gross-to-net reconciliation' verify?

Answer: That gross wages minus all deductions and withholdings equal the net pay distributed to employees

Gross-to-net reconciliation confirms that the mathematical relationship between gross wages, all deductions, tax withholdings, and net pay is correct and complete for each employee.

What is a SOC 1 Type II report and why is it relevant to employers using ADP payroll services?

Answer: A third-party audit report confirming that ADP's internal controls over payroll processing are designed effectively and operating reliably over a defined period

A SOC 1 Type II report provides employers with independent assurance that ADP's payroll processing controls are effective over time, supporting the employer's own financial reporting and audit obligations.

What is a 'ghost employee' scheme in payroll fraud and how can ADP controls help prevent it?

Answer: A ghost employee is a fictitious or terminated employee left on the payroll to divert paychecks; ADP prevents this through user access controls, approval workflows, and regular audits of the employee master file

Ghost employee fraud involves adding fictitious payees or keeping terminated employees active; ADP mitigates this risk through access controls on employee setup and regular system audits.

Which ADP feature is used to automate benefits deduction changes when an employee experiences a qualifying life event?

Answer: Benefits Enrollment Workflow

ADP's Benefits Enrollment Workflow allows administrators to route mid-year benefit changes triggered by qualifying life events through an automated approval process.

Which ADP tool allows employees to view their benefits elections, change voluntary deductions, and update beneficiaries?

Answer: ADP Employee Self-Service (ESS)

ADP Employee Self-Service allows employees to independently manage benefits elections, beneficiary designations, and voluntary payroll deductions.

When an employee has both a child support withholding order and a creditor garnishment, which obligation takes priority?

Answer: Child support withholding order

Child support withholding orders have priority over all other garnishments, including creditor garnishments, by federal law.

What action must a payroll specialist take in ADP when an employee claims exempt from federal income tax withholding on their W-4?

Answer: Set the employee's federal withholding to exempt in ADP and note that a new W-4 must be submitted by February 15 each year to maintain exempt status

Exempt status must be entered in ADP's W-4 configuration, and the IRS requires employees to submit a new W-4 by February 15 annually to renew exempt status.

What is 'holiday pay' configuration in ADP, and what must a payroll specialist verify before each holiday?

Answer: Holiday pay rules must be configured in ADP to define eligible employees, pay rates, and whether hours count toward overtime; the specialist must verify the holiday is on the calendar and rules are active

ADP requires holiday pay to be configured per company policy; payroll specialists must verify the holiday is in the system calendar and that applicable pay rules are active before each holiday pay period.

What is the matching principle and how does it apply to payroll accounting?

Answer: Payroll expenses should be recognized in the same period as the revenue they help generate, requiring accruals for unpaid wages at period-end

The matching principle requires recognizing payroll expenses in the period employees performed the work, which necessitates accruing wages and taxes for pay periods that straddle month-end.

What is the Social Security wage base for 2024 and how does ADP handle employees who exceed it?

Answer: $168,600; ADP automatically stops Social Security withholding once an employee's YTD wages exceed the wage base

The 2024 Social Security wage base is $168,600, and ADP automatically ceases Social Security withholding once year-to-date wages reach that threshold.

Which payroll data elements should be treated as highly sensitive and protected under data privacy regulations?

Answer: Social Security numbers, bank account details, compensation amounts, and tax withholding information

Payroll data including SSNs, bank account numbers, wages, and tax information are classified as sensitive personal and financial data requiring encryption, access controls, and compliance with privacy laws.