[HISTORY: Adopted by the Council of the Borough of Milford 9-6-2017 by Ord. No. 861-2016.[1] Amendments noted where applicable.]
GENERAL REFERENCES
Personnel policies — See Ch.
28.
[1]
Editor's Note: This ordinance was originally adopted as Ch.
6 but was renumbered for organizational purposes.
The purpose and intent of these regulations is to abide by the
requirements of N.J.S.A. 52:27D-20.1 and N.J.A.C. 5:30-17.1 et seq.,
governing electronic disbursement controls for payroll purposes.
As used in this chapter, the following terms shall have the
meanings indicated:
Person(s) responsible for authorizing and supervising the
activities of the payroll service.
The Borough of Milford.
Third-party payroll service organization.
The following payroll service providers shall be required to
comply with these regulations:
A.
Pursuant to the terms and provisions of this chapter, the Borough
is authorized to use the services of third-party disbursement service
organizations for payroll and payroll tax payment purposes, to prepare
the necessary documentation, and to execute disbursements from the
Borough-authorized banking institutions on behalf of the Borough.
B.
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 Borough funds to third-party disbursement service organization
bank accounts for subsequent payment to the appropriate payee, subject
to the provisions of this chapter.
The Borough Chief Financial Officer shall be the Borough's
designated "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.
It shall be the responsibility of the approval officer to approve
the use of third-party disbursement organizations, and the approval
officer 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 approval officer
shall review and approve the contract in accordance with the provisions
set forth hereafter. Prior to the extension or renewal of any contract,
the approval officer shall complete a review of the services rendered
under the contract in accordance with the provisions set forth hereafter.
The disbursing organization shall notify the Borough 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 Borough. 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.
A.
Prior to approval, the third-party disbursement organization shall
provide evidence of satisfactory internal control as may be required
by the Borough's Approval Officer. Such evidence may include
the following:
(1)
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;
(2)
A completed SysTrustTM examination with
an unqualified report on availability, security, integrity and maintainability,
completed in accordance with AICPA/CICA SysTrustTM Principles and Criteria for Systems Reliability; or
(3)
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 Borough.
A.
The appointment of a payroll service shall be pursuant to the Local
Public Contracts Law, N.J.S.A. 40A:11-1, et seq. and shall require
the contractor to do the following, not by way of limitation: data
collection, agency report preparation, calculation of withholding,
direct deposit of payroll disbursements, and/or the transfer of Borough
funds to the disbursing organization's account for subsequent
disbursement of payment.
B.
Contracts for third-party disbursement services are not data processing
service contracts under N.J.S.A. 40A:11-15(5).
C.
Any renewal or extension of a contract under this Chapter shall be
by resolution of the Milford Borough Common Council.
D.
All contracts between the Borough and third-party disbursement organizations
shall be entered into pursuant to these regulations and the laws authorizing
the same and shall comply with the requirements of N.J.A.C. 5:30-17.6,
and any amendment(s) thereto, by providing for the following:
(1)
Adequate provisions to indemnify the Borough 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 Borough
funds, such provisions shall include that the organization shall provide
adequate insurance, with the Borough 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.
(2)
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 Borough and include penalties, fines, interest or
damages.
(3)
In such cases as the organization takes possession of Borough 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 Borough 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.
(4)
The 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 Borough for inspection at the request of the Borough.
(5)
On reasonable notice, which shall be not less than 30 calendar days,
the third-party service organization shall permit an independent audit
at the cost of the Borough to examine its internal controls applying
SAS 70 standards, SysTrustTM 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 Borough governing body
and shall be for Borough internal use only.
(6)
Provide that all disputes between the Borough 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 Borough, such written
disputes shall be directed to the Borough's Chief Financial Officer
and the Borough Clerk.
(7)
The contract shall provide for dispute resolution between the parties.
(8)
The contract shall provide for service of process within the State
of New Jersey for any third-party disbursement service organization(s).
(9)
The contract shall provide for review and enforcement by a court
of competent jurisdiction of the State of New Jersey applying New
Jersey law.
(10)
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 effective immediately upon written notice to the organization
from the Borough.
(11)
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.
(12)
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 chapter.
(13)
Provide that within five days of each disbursement on behalf of the
Borough, 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 Borough
to enable it to reconcile its books and records.
(14)
Provide that all corrections and adjustments must be completed and provided to the Borough promptly. All adjustments and reports of adjustments resulting in disbursements must be reported as in § 27-8D(13) above.
(15)
Provide that copies of notices, memoranda, complaints or other correspondence
shall be forwarded to the Borough within 48 hours of receipt.
