[HISTORY: Adopted by the Mayor and Council of the Borough
of Palisades Park as indicated in article histories. Amendments noted
where applicable.]
[Adopted 2-16-2010 by Ord. No. 1544]
The governing body does hereby authorize the use of a third
party disbursement service organization for payroll, including:
The following words and terms, as used in this article, shall
have the following meanings, unless the context clearly indicates
otherwise:
The individual statutorily responsible for supervising the
accounts and finances of a local unit, including any certifying and
approval officer appointed pursuant to N.J.S.A. 40A:5-17, Subdivision
a, or such individual in similar capacity legally appointed by the
governing body of the Borough.
Any written agreement entered into by a local unit and a
disbursing organization for the purposes authorized in this article.
A demand deposit bank account owned by the local unit and
funded solely for use by a disbursing organization in performing its
duties and responsibilities in accordance with the contract.
Any payment of moneys, including any transfer of funds, by
any means, to the dedicated cash account established for use by a
disbursing organization.
The Mayor and Council.
The Borough of Palisades Park.
Includes transmittals, remittance forms, tax returns, releases,
filings, reports, and tapes supporting the disbursement of funds.
The object and result of all preparations and calculations
for, and the disbursement of salaries and wages, all withholdings
therefrom, and additional liabilities related thereto.
Such service or services of the type describe in this article.
Such service or services may include the processing and disbursing
payroll and payroll agency obligations.
An organization engaged, either directly or indirectly, to
perform any of the services indicated in this article.
Any activity that, in accordance with sound fiscal practices,
affects the general books of entry, ledgers, records, or logs of a
local unit.
The governing body shall by a resolution approve any renewal
or extension of a Contract for third party disbursement service organization.
A.
Prior to the execution of a contract with a disbursing organization
the governing body shall approve the use of disbursing organizations
for the payment of claims pursuant to N.J.A.C. 5:30-17.3(a). Such
approval must describe the specific tasks to be performed by a disbursing
organization, including specific authorization to use electronic means
for the disbursing of funds. The Contract may include, and is not
limited to, data collection, agency report preparation, calculation
of withholdings, direct deposit of payroll disbursements, all Borough
transfers of funds to disbursing organizations, and account for subsequent
payment.
B.
The governing body does, pursuant to N.J.S.A. 40A:5-17a(1), designates
the Chief Financial Officer to be responsible for authorizing and
supervising the activities of the disbursing organization. The Chief
Financial Officer shall be the approval officer to authorize and oversee
the activities of the third party disbursing organization.
C.
The approval officer shall be responsible and shall include the reconciliation
and analysis of all general ledger accounts affected by the activities
of the disbursing organization.
A.
After the governing body has initially approved the use of the disbursing
organization pursuant to N.J.A.C. 5:30-17.3 and N.J.A.C. 5:30-17.4(a),
the CFO shall qualify disbursing organizations pursuant to the requirements
of Section 17.5; and shall review and approve the contract of the
Borough as to the terms, including satisfaction of the requirements
of N.J.A.C. 5:30-17.5 through N.J.A.C. 5:30-17.7. The CFO shall complete
a review of the services under the contract in compliance with N.J.A.C.
5:30-17.5 of the rule.
The Borough must meet the following terms and conditions prior
to executing a contract with a disbursing organization. Prior to the
execution of a contract with a disbursing organization, the Governing
Body shall approve the use of the disbursing organization for the
payment of claims pursuant to N.J.A.C. 5:30-17.3(a). Such approval
must describe those tasks to be performed by disbursing organization
to meet the governing body's objectives including specific authorization
to use electronic means for the disbursing of funds. The Borough may
permit and include and is not limited to data collection, agency report
preparation, calculation of withholding, direct deposit of payroll
disbursements or Borough transfer of funds to disbursing organizations
account for subsequent payment.
A.
Pursuant to N.J.S.A. 40A:5-17a(1) or N.J.S.A. 18A:19-4.1, the governing
body shall designate an approval officer to be responsible for authorizing
and supervising the activities of the disbursing organization. For
authorities operating under N.J.A.C. 5:31-4.1, the governing body
shall designate an approval officer to authorize and oversee the activities
of disbursing organizations.
B.
The governing body shall supplement the duties of the approval officer
established in accordance with N.J.S.A. 40A:5-17a(2) and N.J.S.A.
18A:19-4.1 to include the reconciliation and analysis of all general
ledger accounts affected by the activities of the disbursing organization.
C.
If the terms of the contract between the disbursing organization
and the local unit provide that the disbursing organization will hold
funds of the local unit pending transmittal of those funds to a payee,
the governing body must specifically authorize the disbursing organization
to hold the funds pending transmittal.
D.
The governing body shall require the disbursing organization to provide
the governing body with notification in the event:
(1)
The disbursing organization detects irregularities that may indicate
potential fraud, noncompliance with appropriate laws, dishonesty,
or gross incompetence on the part of the approval officer; or
(2)
The disbursing organization experiences circumstances that could
jeopardize its ability to continue operations or otherwise interrupt
the services provided to the local unit.
E.
A transfer of the Borough's funds between Borough accounts to
a dedicated cash account or to an account owned or controlled by a
disbursing organization:
Disbursing organizations shall meet the following conditions
and/or requirements:
A.
The disbursing organization must provide evidence of satisfactory
internal control, evidence for which shall be required by the CFO.
Such evidence may be:
(1)
The disbursing organization's report on policies and procedures
placed in operation and tests of operating effectiveness, performed
pursuant to American Institute of Certified Public Accountants (AICPA)
Statement on Auditing Standards No. 70; or
(2)
A completed SysTrustTM examination with
an unqualified report on availability, security, integrity and maintainability
completed in accordance with the AICPA/CICA SysTrustTM principles and criteria for systems reliability; or
(3)
Evidence of compliance with a mutually agreed upon external standard
for determination of the sufficiency of a system of internal controls
that support the work to be performed in accordance with the policies
established by the local unit.
B.
All disbursing organizations must have offices within a distance
acceptable to the CFO of the local unit such that the physical delivery
and receipt of documents and records can occur on the same day.
A.
All contracts between the Borough and disbursing organization must:
(1)
Contain adequate provisions to indemnify the Borough against any
losses incurred as a result of the actions or inactions of the disbursing
organization;
(2)
Require the disbursing organization to be responsible for the errors
and omissions of its employees or agents, particularly where those
errors and omissions prevent timely disbursements on behalf of the
Borough from being made, including penalties, fines, interest and
damages; and
(3)
In those cases where the disbursing organization takes possession
of the Borough's funds, require 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 local unit for 30 days. Such exposure as regards cash shall
be based on at least the amount of money accessible by the disbursing
organization during said thirty-day period and shall not include monies
that the disbursing organization cannot divert to its own benefit.
B.
All disbursing organizations shall have a written complaint procedure
in existence. At a minimum, the complaint procedure shall require
that a complaint log be maintained, which shall be available to the
Borough for inspection.
C.
Upon reasonable notice, the disbursing organization shall allow an
independent auditor compensated by the Borough to examine its internal
controls applying SAS 70 standards, SysTrustTM standards or other standards and procedures mutually agreed upon
to ensure accurate, complete and timely work product. Upon completion,
the independent auditor's report shall be provided to the CFO
and governing body and shall be for internal use only.
D.
All disputes between the parties and disputes concerning the contract
or its operation shall be in writing and forwarded to the other party
via registered mail. All contracts must have appropriate provisions
for:
E.
Within five working days of each disbursement on behalf of the Borough,
the disbursing organization shall provide to the CFO reports and documentation
supporting the disbursements. The contract shall also specify the
information required by the Borough to enable it to reconcile its
books and records.
F.
All corrections and adjustment must be completed and provided to
the Borough promptly. All adjustments and reports of adjustments resulting
in disbursements must be reported consistent with the provisions of
N.J.S.A. 5:30-17.6(e).
G.
Copies of notices, memoranda, complaints, or other correspondence
received by the disbursing organization regarding Borough accounts
shall be forwarded to the Borough within four hours of receipt.
H.
Contracts for third-party disbursement services are not data processing
service contracts under N.J.S.A. 40A:11-15(5) and N.J.S.A. 18A:18A-42d.
I.
All contracts for third-party disbursement services shall have appropriate
provisions for termination of the contract, including, but not limited
to, termination for failure to perform on the part of the disbursing
organization.
J.
All contracts entered into between the Borough and disbursing organizations
for the provision of third-party disbursement services shall be in
writing and executed by all parties, including intermediaries, such
as banks providing payroll services as part of a compensating balance
agreement.
K.
The contract for third-party disbursement services must require that
no disbursement is made unless the demand for payment meets the requirements
of N.J.S.A. 40A:5-16, N.J.S.A. 18A:19-2 and this chapter.
