[HISTORY: Adopted by the Township Council of the Township of Ewing as indicated in article histories. Amendments noted where applicable.]
[Adopted 1-10-2012 by Ord. No. 11-27]
Authorization. Pursuant to the terms and provisions of this article, the Township may use the services of third-party disbursement service organizations for payroll and payroll tax payment purposes to prepare the necessary documentation and execute disbursements from the Township-authorized banking institutions on behalf of the Township.
Permitted actions. Such third-party disbursement service organizations may use electronic means for such disbursements. In addition, the organizations may perform tasks including but not limited to data collection, agency report preparation, calculation of withholding or direct deposit of payroll disbursements. Such organizations may transfer Township funds to third-party disbursement service organization bank accounts for subsequent payment to the appropriate payee, subject to the provisions of this article.
Approved officer. The Township Chief Financial Officer shall be the approval officer and shall be responsible for authorizing and supervising the activities of the disbursing organizations. In addition to such other statutory responsibilities of the approval officer, the approval officer shall reconcile and analyze all general ledger accounts affected by the activities of the disbursing organization.
Responsibility of disbursing organization. The disbursing organization shall notify the Township in the event the disbursing organization detects irregularities that may indicate potential fraud, noncompliance of appropriate law, dishonesty or gross incompetence on the part of the approval officer or if the disbursing organization experiences circumstances that could jeopardize its ability to continue operations or otherwise interrupt services provided to the Township.
Responsibility of Chief Financial Officer. It shall be the responsibility of the Chief Financial Officer ("CFO") to approve the use of third-party disbursement organizations, and the CFO shall qualify the organization in accordance with the provisions set forth hereafter. Prior to the execution of a contract for the provision of third-party disbursement services, the CFO shall review and approve the contract in accordance with the provisions set forth hereafter. Prior to the extension or renewal of any contract, the CFO shall complete a review of the services rendered under the contract in accordance with the provisions set forth hereafter.
Conditions. Prior to approval, the third-party disbursement organization shall meet the following conditions and requirements:
The disbursing organization shall provide evidence of satisfactory internal control as may be required by the Township CFO. Such evidence may include the following:
Reports on policies and procedures placed in operation and tests of operating effectiveness, performed pursuant to the American Institute of CPAs ("AICPA") Statement on Auditing Standards No. 70;
A completed SysTrust™ examination with an unqualified report on availability, security, integrity and maintainability, completed in accordance with AICPA/CICA SysTrust™ Principles and Criteria for Systems Reliability; or
Evidence of compliance with a mutually agreed external standard for determination of the sufficiency of a system of internal controls that supports the work to be performed in accordance with the policies established by the Township; and
All disbursing organizations shall have offices within a distance acceptable to the CFO such that the physical delivery and receipt of documents and records can occur in a manner that assures the delivery of paychecks on regularly scheduled paydays.
Contracts; requirements. No third-party disbursement organization shall perform services for the Township unless the Township enters into a written agreement for such services with the organization on the terms and conditions set forth hereafter:
All contracts between the Township and third-party disbursement organizations shall provide as follows:
Adequate provisions to indemnify the Township against losses incurred as a result of actions or inactions by the organization, its agents, employees and officers. In the event the organization has access Township funds, such provisions shall include that the organization shall provide adequate insurance, with the Township named as an additional insured, to cover possible losses equal to or greater than the highest level of exposure in a thirty-day period, which shall be not less than net payroll and all taxes due and owing to governmental entities;
Requirements that the organization be responsible for errors and omissions of its agents, employees and officers, particularly where such errors and omissions prevent the timely disbursement of payments on behalf of the Township and include penalties, fines, interest or damages; and
In such cases as the organization takes possession of Township funds, the disbursing organization shall provide adequate insurance to cover such losses as may arise as a result of errors, omissions, failure to perform or dishonesty in amounts at least equal to the highest level of exposure to the Township for 30 days. Such exposure as regards cash shall be based on at least the amount of money accessible by the organization during said thirty-day period and shall not include moneys that the organization cannot convert to its own benefit.
All third-party disbursement services organizations shall have a written complaint procedure which requires, at a minimum, that all complaints be maintained in a complaint log which shall be available to the Township for inspection at the request of the Township.
On reasonable notice, which shall be not less than 30 calendar days, the organization shall permit an independent audit at the cost of the Township to examine its internal controls applying SAS 70 standards, SysTrust™ standards and other standards and procedures which may be mutually agreed to assure an accurate, complete and timely work product. Such independent audits shall be provided to the CFO and the Township governing body and shall be for Township internal use only.
All disputes between the Township and third-party disbursement services organizations, whether concerning the contract or the operations performed under the contract, shall be in writing and forwarded to the other party by registered mail. For the Township, such written disputes shall be directed to the Township CFO and the Township Clerk. The contract shall provide for dispute resolution between the parties. The contract shall provide for service of process to the third-party disbursement services organization in New Jersey. The contract shall provide for review and enforcement by a court of competent jurisdiction of the State of New Jersey applying New Jersey law.
Within five days of each disbursement on behalf of the Township, the organization shall provide the CFO with reports and documentation supporting the disbursements. The organization shall provide such information as may be required, from time to time, by the Township to enable it to reconcile its books and records.
All corrections and adjustments must be completed and provided to the Township promptly. All adjustments and reports of adjustments resulting in disbursements must be reported as in Subsection G(5) above.
Copies of notices, memoranda, complaints or other correspondence shall be forwarded to the Township within 48 hours of receipt.
Contracts for third-party disbursement services are not data processing service contracts under N.J.S.A. 40A:11-15(5).
The contract shall provide for termination of the contract, including but not limited to a provision for termination for failure to perform on the part of the disbursement organization. Such termination shall be made effectively immediately upon written notice to the organization from the Township.
The contract shall be in writing and executed by all parties, including intermediaries, such as banks providing payroll services as part of a compensating balance agreement.
The contract shall provide that no disbursement shall be made unless the demand for payment complies with the provisions of N.J.S.A. 40A:5-16 and this article.