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    payroll process payroll process Presentation Transcript

    • Human Resources (HR) Management and Payroll Process
    • Learning Objectives
      • Know the definition and basic functions of the HR management and payroll processes
      • Recognize the relationship between the HR management and payroll processes and their environment
      • Comprehend the relationship between the HR management and payroll processes and management decision making
      • Understand the logical and physical characteristics of the HR management and payroll processes
      • Become familiar with some of the technology used to implement the HR management and payroll processes
      • Know some of the plans commonly used to control the payroll process
      HR Management and Payroll Processes
    • HR/P Spoke in the AIS Wheel
      • In this chapter, we spotlight the human resources (HR) management and payroll processes.
      • It will become clear later why we depict these processes with one spoke in the AIS wheel
      • We will describe the various users of the HR management and payroll processes, each having their own view of the enterprise system and enterprise database
      • In addition, we will analyze the process controls related to the payroll process
    • Synopsis
      • Human capital management (HCM) , the process of managing how people are hired, developed, assigned, motivated and retained, presumes that employees reflect a strategic investment, rather than an administrative cost
      • Some estimates place the value of human capital between $500,000 and $5 million per person
      • Costs of such human capital, including compensation, benefits, and HR, represent 43 percent of the average corporation’s total operating expense
    • Synopsis
      • The automation of HR (dubbed “e-HR”) may transform HR from a cost center to a highly valued, strategic, mission-critical part of the business
      • HR automation will affect evaluation and compensation programs to reflect the changing work patterns, including:
        • graying workforce
        • virtual teams
        • telecommuters
        • consultants
        • contractors
        • part-time and temporary employees
    • Synopsis
      • In this chapter we explore three themes:
        • First, we briefly examine the importance of people to the success of any organization
        • Next, we describe how the HR management and payroll processes assist management in leveraging its human capital
        • Finally, we introduce some of the technology used to implement modern HR management and payroll processes
    • Process Definition and Functions
      • Personnel management started by handling payroll and personnel administration, but evolved by adding functions to handle recruiting, employee relations, and so on.
      • HRM still viewed personnel as something that could be controlled
      • HCM philosophy is based on three major principles:
        • An individual’s value to an organization is derived from his/her job-related knowledge, skills, attitude, and motivations
        • Human assets include full-time permanent employees, plus part-time employees, temporary employees, and independent contractors.
          • With supply chain management , an organization’s human assets could include employees of suppliers, sales channel partners, and customers
        • A person’s relationship with an organization, from hiring through termination, must be nurtured and managed to obtain maximum lifetime value
    • Definition of HR Management Process
      • Primary function of the HRM process is to create information flows that support the following:
        • Repetitive work routines of the HR department
        • Decision needs of those who manage the HR department
      • The HRM process supports the work routines of the HR department and provides information for management decisions by:
        • Capturing, recording, and storing data concerning HR activities
        • Generating a variety of HR forms and documents
        • Preparing management reports
        • Preparing governmental reports
    • The Payroll Process
      • Many companies often merge payroll and HR
      • The payroll process maintains records of payroll taxes, fringe benefits, attendance/absence, time worked and employee paychecks
      • The payroll process is generally automated because computers are much faster at handling the repetitive computations necessary (payroll is also the most frequently outsourced application in accounting)
      • Current HR software reaches far beyond simply doing payroll and includes:
        • Benefits admin, applicant tracking/processing, skills inventories and compliance reporting
      • Much of HRM is NOT captured by GAAP
        • But accountants must recognize the immense value of human capital and its affect on the long-term financial health of the organization
    • Payroll Part of HR Module
      • It is common for payroll to be part of the HR module in software (SAP example)
    • Figure 14.1 on page 512
      • The HR module includes options for both HR and payroll, among others
      • The advantages gained by allowing the two processes to share common data include:
        • Creating a single source for obtaining HR information
        • Providing for faster data access
        • Minimizing data redundancy
        • Ensuring data integrity and consistency
        • Facilitating data maintenance
        • Improving data accuracy
    • Organization Chart of the HR Function
    • Duties of HR Managers
    • Duties of HR Managers
    • Technology Trends and Developments
      • HR self service systems
      • Organizations might outsource other functions to support HR management processes.
        • Web-based collaboration
        • Payroll
      • Enterprise systems play a major role in implementing required HR and payroll functionality.
      • Implementing the HRM process with an enterprise system can help recognize the benefits of integration of the HR management process with other enterprise systems modules such as:
        • Financial Accounting
        • Logistics
        • Sales and Distribution
        • The Workflow Module
    • Implementing the HRM Process
      • Process Inputs: In general, the HR forms in the figure capture information about three HR-related events:
      • (1) selecting employees
      • (2) evaluating employees, and
      • (3) terminating employees
    • Implementing the HRM Process
      • Selecting employees may be initiated in one of two ways:
        • Departmental managers (outside the HR department) may initiate the process to satisfy their immediate hiring needs
        • Selection process may be started by the system automatically
    • Implementing the HRM Process
      • Evaluating employees comprises a multitude of activities
        • Departmental managers and supervisors (again, outside the HR function) usually initiate evaluations or other changes affecting employees
        • The manager of personnel appraisal and development (in HR) typically approves the review and implements such changes
    • Implementing the HRM Process
      • Terminating employees closes the employment process loop
        • Periodically, departmental managers and supervisors (in concert with HR managers) must make difficult decisions about the retention of employees
        • If a termination is necessary, the employee change screen is used to initiate the process of changing an employee’s status from current employee to terminated employee
    • Implementing the HRM Process
      • Processing Logic and Process Outputs.
      • HR requests initiated outside of the HR department are approved within that department and then routed to HR for approval
      • Some data may be entered within HR
      • The employee/payroll master data, skills inventory data, and labor-force planning data within the enterprise database are updated and various reports are made available
      • Several outputs are produced
        • New hire:
          • An employment letter is sent to the employee
          • Selection notice is sent to the department manager
        • Feedback on job performance:
          • Employee review form
        • Termination:
          • Employees are notified of a dismissal through a dismissal letter
          • Termination notice sent to the operating department manager.
    • Implementing the HRM Process
      • HRM process prepares reports for government and non-government entities
        • Payroll reports: employee federal, state, and local taxes
      • HR reports might include those provided to the following:
        • • Unions
        • • Equal Employment Opportunity (EEO)
        • • Occupational Safety and Health Administration (OSHA)
        • • Department of Labor
      • There are also numerous communications to employees of HR-related information
        • Job opening announcements
        • Training information
        • Phone books
        • Benefits literature
        • Policy and procedure manuals, and the like.
      • Many companies have found that such materials can be disseminated effectively and efficiently through an HR portal, which serves as a central data source for such information.
    • HR Management Flowchart
    • Key Data Tables in the HR Process
      • Though the flowchart shows only one data store, multiple database tables are contained:
        • Employee/payroll master data
        • Labor-force planning data
          • Staffing requirements
          • Skills required
          • Turnover data
        • Skills inventory data
    • The Payroll Process
      • Payroll generally falls under the controller’s office with the treasurer participating in distributing paychecks
    • Payroll Process Context Diagram
    • Payroll Process: Level 0 DFD
    • Payroll Data and Flows
      • Tax rates data
        • Contains current tax rates (federal, state, county and city) for employee withholding and employer accruals
      • Attendance time record
        • Lists hours employee are at the job site available for work; usually kept on time card
      • Job time records
        • Start and stop times for particular jobs for direct labor distribution
    • Federal Payroll Tax Reports
      • 941 (report of FICA taxable wages)
      • W-2 (employee wage and tax statement)
      • 1099 (reports non-salary income)
      • Employee Retirement Income Security Act (ERISA) reports (reports on private pension fund assets management)
    • Accounting Entries in Payroll Process
    • Payroll Process Flowchart
    • Payroll Has High Fraud Potential
      • Types of payroll frauds:
        • Ghost employees (employees who don’t exist but are issued paychecks)
        • Falsified hours (employees who overstate hours worked)
        • Commission schemes (collecting commissions on false sales or using false commission rate)
        • Worker’s comp schemes (faking injury to receive compensation)
    • Payroll System Controls
      • Segregation of duties between HR (employee record creation), payroll (prepares payroll) and AP/cashier (disburses cash)
      • Direct deposit (eliminates opportunity for check fraud)
      • Review of employee master data for duplicate names and/or social security numbers
      • Comparison of actual payroll to budget
    • Reimbursement Fraud
      • Reimbursement for employee business expenses often clear the payroll system
        • Claiming personal expenses as business related
        • Altering receipts to increase expenses
        • Submitting false receipts
        • Submitting same expense multiple times
    • Payroll Process Control Matrix Legend: A = Provide employees with timely paychecks. B = Provide timely filing of tax returns and other reports to government agencies. C = Comply with requirements of payroll and tax laws and regulations.
    • Payroll Process Control Matrix