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Ch15ed12romney

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Ch15ed12romney

  1. 1. Ch. 15 -HRM / Payroll Cycle
  2. 2. Cycle of Business Activities Capital Capital Investment Investment Financing Cycle Sale Revenue Cycle Input General Ledger and Acquisition Reporting SystemExpenditure Human Cycle Production Resource Cycle Payroll Cycle Hire & Conversion pay employees
  3. 3. HRM/Payroll SystemPurpose: recruiting & hiring Human Resource Dept. training job assignment Important to integrate and performance monitor nonfinancial evaluation measures & intellectual Discharge capital compensation Employees are the most Payroll important asset!! (Controller’s Dept.)
  4. 4. Figure 15-1 Payroll Context Diagram Payroll Changes Paychecks Employees H/R Reports Withholdings and deductions Time & Attendance Data Payroll checkDepts. Payroll Bank Reports System Rate changes & instructions Govt Payroll Taxes & Tax Reports Insurance/ Checks & reports Other Tax Rates and Instructions
  5. 5. Figure 15-1 Payroll Context Diagram Payroll Changes Employees H/R Withholdings and deductions Time & Attendance DataDepts. Payroll System Rate changes & instructions Govt Insurance/ Other Tax Rates and Instructions
  6. 6. Figure 15-1 Payroll Context Diagram Paychecks Employees H/R Reports Payroll checkDepts. Payroll Bank Reports System Govt Payroll Taxes & Tax Reports Insurance/ Checks & reports Other
  7. 7. Figure 15-1 Payroll Context Diagram Payroll Changes Paychecks Employees H/R Reports Withholdings and deductions Time & Attendance Data Payroll checkDepts. Payroll Bank Reports System Rate changes & instructions Govt Payroll Taxes & Tax Reports Insurance/ Checks & reports Other Tax Rates and Instructions
  8. 8. Payroll Inputs Job Time reconcile TicketsCards/Sheets Commission ReportsEmployment Piecework Forms Reports
  9. 9. Figure 15-4Payroll Cycle Level 0 DFD abbreviated HRM Payroll Payroll Master 1.0 changes Update payroll master fileThreats:•Unauthorized changes•Inaccurate information Withholdings and deductionsControls: •Data integrity controls Employees •Access controls •Segregation of duties •Supervisory review
  10. 10. Figure 15-4Payroll Cycle Level 0 DFD abbreviated HRM Tax Rates & Deductions Payroll 2.0 1.0 changes Update tax Update rates & payroll deductions master file Rates and Instructions Withholdings and Government deductions Agencies/ Insurance & other Co’s. Employees
  11. 11. Figure 15-4Payroll Cycle Level 0 DFD abbreviated HRM Tax Rates & Deductions Payroll 2.0 1.0 changes Update tax Update payroll rates &Threats: master file deductions •Inaccurate information Rates and Instructions Withholdings Controls: and Government Agencies/ •Data integrity controls deductions Insurance & other Co’s. •Biometrics Employees •Supervisory review Job Time Tickets 3.0 Various Validate time Departments & attendance data Time Cards
  12. 12. Figure 15-4Payroll Cycle Level 0 DFD abbreviated HRM Tax Rates & Deductions Payroll Payroll Master changes 2.0 1.0 Update tax Update rates & payroll deductions 4.0 master file Prepare payroll Rates and Instructions General Ledger Withholdings and Government Threats: Time Validated deductions Agencies/ Insurance & •Processing errors & Attendance Data other Co’s. •Inaccurate information Employees Job Time Tickets Controls: 3.0 Validate time Various •Data integrity controls & attendance Departments •Earnings statements to employees Time Cards data •Supervisory review
  13. 13. Figure 15-4Payroll Cycle Level 0 DFD abbreviated HRMThreats: Tax Rates & Deductions Payroll •Theft or fraudulent distribution 2.0 Payroll Master of paychecks 1.0 changes Update tax Update rates & payrollControls: deductions 4.0 master file •Physical and logical access controls Prepare payroll •Segregation of duties Rates and Instructions General Ledger Withholdings •Pre-numbered documents Government and Validated Time Payroll deductions Agencies/ & Attendance Insurance & Data other Co’s. 5.0 Employees Disburse Job Time Tickets payroll Paychecks 3.0 Various Validate time Payroll check Departments & attendance data Bank Time Cards
  14. 14. Figure 15-4Payroll Cycle Level 0 DFD abbreviated HRM Tax Rates & Deductions Payroll Payroll Master changes 2.0 1.0 Update tax Update rates & payroll deductions 4.0 master file Prepare payroll Rates and Instructions General Ledger Withholdings and Government Validated Time Payroll deductions Agencies/ & Attendance Insurance & Data other Co’s. 5.0 Employees Disburse Job Time Tickets payroll Paychecks 3.0 Various Validate time Payroll check Departments & attendance data Bank Time Cards
  15. 15. Payroll Cycle Level 0 DFD (continued) Figure 15-4 abbreviated Tax Rates & Deductions Payroll Master 6.0 Calculate Reports HRM employer-paid General Ledger benefits and taxes Reports Various Departments
  16. 16. Payroll Cycle Level 0 DFD (continued) Figure 15-4 abbreviated Tax Rates & Deductions Payroll Master 6.0 Calculate Reports HRM employer-paid General Ledger benefits and taxes Reports Various Departments Payroll taxes and deductions Government Checks and Reports 7.0 Agencies/ Disburse payroll Insurance & taxes and other Co’s. miscellaneous deductions
  17. 17. Figure 15-2 Systems Flowchart - abbreviated Daily Payroll Activities Factory/ Computer HRMVarious Departments Operations Time Hours Worked HR Transactions - Clock Update Pay changes Time on tasks HRM/Payroll Hiring/Firing Machines Database Other Payroll Cost Transaction Payroll Data File Master (job time (Time card File tickets) data) Integrated Database
  18. 18. Figure 15-2 Systems Flowchart - abbreviated Weekly/Monthly Payroll Activities Computer Operations Payroll Payroll Transaction Prepare Master File File (Time card Payroll data) General Paychecks Ledger Payroll Reports Master Register File Cashier(Treasurer’s Dept.) Management
  19. 19. Payroll EntriesStep 1: Charge to payroll clearing account Dr. Cr.Payroll Clearingcontrol account XX Cash XX Payroll taxes payable XX Other deductions payable XX
  20. 20. Payroll EntriesStep 2: Allocate labor to various expense categories Dr. Cr. Sales salaries XX Z er o Admin. salaries XX bn ac le a Indirect labor XX cc h ek Direct labor XX Payroll clearing control account XX
  21. 21. Payroll Entries - Employer Benefits & Taxes Dr. Cr.Payroll tax expense XX F.I.C.A. payable XX State unemployment taxes payable XX Federal unemployment taxes payable XX Other benefits payable (i.e. insurance) XX Employers must match employee F.I.C.A. tax. Unemployment taxes are based on various percentages.
  22. 22. Payroll System ReportsSpecial Purpose Reports: Control• various cumulative Reports earnings reports Earnings Statements/ Payroll W-2’s RegisterDeduction (Journal) Register
  23. 23. Outsourcing OptionsPayroll Service Bureau» Benefits – reduced costs – privacy – free-up computer resources» Disadvantages – difficult integration with HRM systemProfessional Employer Organization
  24. 24. Opportunities for Using I/TOn-line employee access tobenefits/withholding info on companyintranetdirect deposit and EDIElectronic time clocksBadge readers
  25. 25. Segregation of DutiesBetween:Timekeeping Payroll and
  26. 26. Segregation of DutiesBetween:Timekeeping Payroll and Payroll Cash and Disbursements
  27. 27. Segregation of DutiesBetween:Timekeeping Payroll and Payroll Cash and Disbursements Payroll and HR
  28. 28. Combating Payroll ThreatsImprest payroll accountunclaimed paychecks sent to I/Areconciliation of check signing machinecontrol of time cards/blank checkssegregate payroll distributionpayroll file access controlsfile backups
  29. 29. HR ControlsHiring background checksGovernment regulation complianceControl over master file

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