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Motor Vehicle Reconciliations

September 30, 2019

Centium was recently engaged by a large NSW Government agency to assist with the review and re-calculation of their motor vehicle employee salary package reconciliations over the past two years. These vehicles are packaged on a business/private usage basis rather than as novated leases.

We found that:

  • Spreadsheets used by the agency were developed in-house rather than applying available NSW Government templates for this task
  • In-house spreadsheets had extensive formula errors, and a number of the standard factors that apply to the annual vehicle cost calculations were incorrect
  • There were numerous instances of incorrect data entry when compared to source documents (e.g. vehicle base value, lease costs, and relevant package dates
  • Vehicle business usage percentages were not supported by employee maintained running sheets, in contravention of NSW Government guidelines.
  • Inadequate fleet records had been maintained to verify employee advice of the return of the packaged vehicle to the agency fleet for short leave periods
  • FBT liabilities were incorrectly calculated.

Over 100 individual vehicle salary package reconciliations were performed resulting in an increase in employee payroll payments. Fortunately for the agency concerned, there was minimal requirement to recover overpaid moneys.

Agencies need to:

  • Introduce systems and put processes in place to check / double check motor vehicle calculations to minimise the impact on employees
  • Ensure that motor vehicle salary package tools and methodologies are consistent with NSW Government guidelines
  • Implement systems and processes to ensure that employees with motor vehicles are completing “running sheets” in accordance with NSW Government and ATO requirements
  • Maintain accurate and complete records regarding motor vehicle package arrangements.

How we can help

Centium’s recent recommendations will enhance the efficiency and robustness of the agency’s reconciliation process in future. Accordingly, we can offer our services to provide advice, lend a “fresh set of eyes” and assist with undertaking motor vehicle and/or specialist taxation reconciliations.

For more information, please contact Penny Corkill, Director.  Penny is an experienced HR & OD professional and qualified internal auditor.

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