Payroll Accounting Case Study Solution

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A. Mr. Zakrzewski believes that Mr. Garrett’s recommendation to reverse the pro forma adjustment is unreasonable because he believes it doesn’t account for any of the changes during the test year. He states that the payroll adjustment is designed to annualize wage and benefit expense due to known and measurable increases in the wage and employee headcounts at the conclusion of the test year. He concludes this by saying that Mr. Garrett’s suggested adjustment to the payroll doesn’t consider the adjustments already made by EAI and is unreasonable as a result. Q. WHAT DID STAFF WITNESS TAYLOR ADDRESS REGARDING TO PAYROLL ADJUSTMENT IN HIS SURREBUTTAL? A. Mr. Taylor agrees with Mr. Zakrzewski corrections made about his calculations of payroll adjustment and with the exception of one. Mr. Taylor states that the five year average O&M expense ratios is more appropriate for normalization of payroll then it would be to use the 2012 payroll all he revised his adjustment to 1,345,537 to recognize the loaned labor and mutual assistance wages and related expenses. Q. WHAT DID HHEG’S MR GARRETT ADDRESS REGARDING TO PAYROLL ADJUSTMENT IN HIS SURREBUTTAL? A. Mr. Garrett addresses EAI’s…show more content…
I would recommend that the Commission supports Staff Witness Taylor in his Surrebuttal testimony, including the five year normalization of payroll expense and with the added final calculations performed by Mr. Zakrzewski to normalize the EAI direct payroll for five years as well for a measure of consistency. I would further recommend that the Zakrzewski’s final payroll adjustment for the known and measurable changes it expects to see in the coming years. I disagree with Mr. Garrett, in that I believe the payroll adjustment is not so far outside of the test you that it cannot be used for adjustment. I also disagree that payrolls are likely to decrease over as time moves onward and the fact that the decreased employee levels should be adjusted because this is captured in EAI’s

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