Welcome to the TPS Overview. This section is intended to provide a general understanding of TPS design, its main components and scope. Links to further details are provided within each section of this Overview.

Components of TPS
As a measurement system, TPS evaluates the quality of State unemployment insurance (UI) tax operations. Quality is examined in terms of accuracy, timeliness, and in some cases, "completeness".

The TPS program consists of several different methodologies designed to work together in measuring quality:

• Computed Measures
• Program Reviews
• Systems Reviews and Sampling

NOTE: The TPS Components represent different review methodologies, not a particular State tax system, since UI tax operations differ from State to State. TPS review is driven by tax function and not restricted by the State's particular organizational structure. Tax functions and responsibilities sometimes overlap within the State.

While these methodologies can be used individually and in concert with each other, they build upon each other to comprehensively assess the strengths and weaknesses of each tax function. For instance, a strong automated data processing system needs to be in place in order to produce the necessary sampling universes and to gather and compile data for Computed Measures. In turn, results from Acceptance Sampling serve to confirm that the internal controls the State has in place are operating as intended (Systems Review).

What Tax Functions are Examined?
The area of UI tax has been broken down into thirteen individual activities. Each tax activity is measured in one or more ways using the TPS design methodology.

Computed Measures
Computed Measures are specific indicators for performance quality. Data on timeliness and completeness aid the TPS reviewer in the final evaluation of each tax area under review.

On a regularly scheduled basis, States electronically report data to the US Department of Labor (US DOL) via the SUN system. The TPS system automatically transforms these data elements into performance measurements. Here are the steps involved.

1. State's tax data is gathered by the mainframes from normal operations.
2. Tax data goes from the State's mainframe into the SUN system for Required Reports.
3. State's TPS reviewer extracts Computed Measures data from the SUN system.
4. TPS reviewer evaluates and includes Computed Measures data in the Annual Report.

What do they tell?
Timeliness - for instance, the timeliness of securing delinquent employer reports, or the timeliness of making successor determinations.

Completeness - for instance, the proportion of accounts receivable "turned over" by the collections unit, or the proportion of employers that are audited, or the proportion of field audits that result in changes.

For details, go to the Computed Measures module.

Program Reviews
As a core component of TPS, the Program Reviews consist of two portions, each dependent on the other: Systems Reviews and Acceptance Sampling. These two design elements work together to provide assurance of accuracy for each tax function.

Systems Reviews
These reviews require thorough examination of each tax function's operations and system of internal controls to ensure they are in place and operating as intended. They support Acceptable Sampling results and allow samples to remain fairly small (60). Here are some details:

• Verification is achieved by in person reviews, observation and interviews.
• Areas where controls are lacking are identified as at "Risk".
• These reviews are not the final determinant of quality.
• Systems Reviews are conducted at least once every four years.

For more details, click here.

Acceptance Sampling
This activity involves examination of 60 sample cases from each tax function to confirm that work/output is accurate. (An exception is made in the Cashiering tax function, where an Estimation Sample of 500 is used) Here are other important facts:

• Acceptance Samples are used in conjunction with Systems Review to provide "reasonable assurance" of accuracy.
• If two or less cases fail, there is reasonable assurance that 98% of the work is processed accurately. If three or more fail, the entire sample fails.
• If concerns remain, an Expanded Sample can indentify the actual level of accuracy.
• The final determinant of quality is based on sampling results.
• Acceptance Sampling is conducted every year (with the exception of Experience Rate).

For more details, click here.

Program Review Scorecard
A Program Review Findings Chart (PRFC) is used to enter the results of Systems Reviews and Acceptance Sampling in one location.

Under the heading of "Systems Reviews", the chart displays whether the internal controls are "Complete" or if there is "Risk".

Findings for sampling are also shown here. Does the sampling confirm reasonable assurance of accuracy? "Yes" if two or less cases failed, or "No" if three or more cases failed.

Results are expected to be complementary. If all controls are in place, they would be expected to produce accurate outcomes and the sample would likely pass. There would be CONSISTENCY between the review and sample findings. However, this does not always happen. Here are the possible scenarios.

Program Reviews Possible Outcomes
Systems Reviews	Samples	Consistency?
No Risk found	Sample passes	Consistency
No risk found	Sample Fails	Inconsistency
Risk found	Sample passes	Inconsistency
Risk found	Sample fails	Consistency

When an inconsistency occurs, the results are not complementary. For example, some of the controls for training staff in the Contribution Report Processing area were found to be missing, or "at risk". However, all 60 of the sample cases passed the sample. Why could this discrepancy have taken place?

Because results between Systems Reviews and Sampling will not always be consistent with one another, the TPS reviewer will need to understand the reason behind such discrepancies.

NOTE: the final evaluation on accuracy is based on the Acceptance Sample results.

Concluding TPS Review
At the end of each calendar year comes the complex task of "pulling it all together". Here are some of the steps the TPS reviewer will take.

• Assess Computed Measures findings
• Complete the Program Review Findings Chart
• Prepare a draft TPS Annual Report
• Conduct an exit interview for each tax funtion
• Prepare the TPS Annual Report

Timing of TPS Reviews
As noted in the earlier tutorials, there are many required activities and they build upon the other. Here are some of the most basic cycles.

• Extract Computed Measures - Every year as part of the Annual Report
• Conduct Systems Reviews - Every four years unless problems were found or changes have been made
• Examine Samples - Every year (exception for Experience Rate sample)
• Participate in Federal Team Reviews - Every fourth year in your own State. More frequent participation in inter-State reviews

Conclusion
Now that the TPS components have been described, continue working through this tutorial for more details by exploring the individual tutorials on Computed Measures, Systems Reviews, Sampling, and Annual Reports. To enter, click on any of the tutorial titles to the left of this screen.