HR / Payroll Cycle

ATG 383 - Spring 2002

Overview

• Operation of Payroll System

• Risks and Controls for Payroll System

• Accounting for Human Resources

Payroll Inputs for Process 1.0

• Employees

• Various agencies

• HRM– Why are some payroll related functions

located in HRM department?

Payroll Inputs for Process 2.0

• Revenue Cycle

• Various Departments or Employees– Who is responsible for reviewing and

editing payroll input?

Payroll Outputs for Process 4.0

• Bank – Special Payroll Account

• Employees– How to disburse funds?

• G.L. System

Payroll Outputs for Process 5.0

• G.L. System

• Various Agencies

Not shown on DFD – Still part of payroll process

• Answer inquiries about payroll

• Issue reports on payroll activities– Internal use: management and cost accounting– External use: employees and government

• Independent reconciliation of payroll account.

Payroll Cycle Risks and Threats

Threats Primarily Addressed by HRM

• Hiring unqualified employees

• Violation of employment law

• Inappropriate incentive compensation

Threats the Payroll System Can Address

• Unauthorized changes to payroll master file

• Inaccurate time data– What if employee X clocks in

for employee Y?

Threats the Payroll System Can Address

• Inaccurate payroll processing

• Theft or fraudulent distribution of paychecks

Threats the Payroll System Can Address

• Loss or unauthorized disclosure of data

Outsourcing Payroll Processing

• Many companies use an outside service bureau for payroll– Benefits?– Risks?

Accounting for Human Resources

Example of HRM SystemSource: http://www.harmony-solutions.com.au/overview2.htm

Core HRM System

• Biographical dataName, address, employee id.Service history.Competencies.

• Establishment (Position) Data

Position title.Requirements.Position occupancyHistory

Recruitment Module

Administer advertising of vacant positions Generate advices to applicantsArchive unsuccessful applicant recordsAdminister EEO incident claims

Competency Management

Assemble and analyze corporate training needs Identify corporate and individuals' skills deficits Match competencies to position, project, and

workforce requirements Identify training strategies which impact on

employee performance

Performance Appraisal

Administer employee performance plans and appraisals

Ensure that performance appraisals and plans are conducted on schedule

Record performance assessments and decisions concerning employee performance

Record employee comments concerning their performance assessments