Course Name : M0034 - Information and Business Process

Year : 2011

The HR managementand Payroll Cycle

Session 17-18

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Learning outcome

• Describe the model of business process • Integrate the whole model of business process• Outlines the roles of Information Technology in

Business Process and Organizational activities to achieve its goals

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Learning objectives

After studying this chapter, student will able to : Describe the key objectives and strategic implications

of the HR management and payroll cycle. Describe HR management and payroll cycle data and

key HR management and payroll business decisions. Identify and document the primary activities in the HR

management and payroll cycle and the data procedured by these activities.

Analyse risks and develop control plans pertinent to the primary activities in the HR management and payroll cycle.

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HR MANAGEMENT AND PAYROLL CYCLE OVERVIEWAND KEY OBJECTIVES

What are the key objectives and strategic implication of the HR management and payroll cycle?

• The HR management and payroll cycle consists of two phases : The HR management phase and The payroll phase.

• The HR management, where the organization interacts extensively with employees, management and production.

• The objective of this phase is to ensure that the correct employee details are used and the correct hours worked are input for an employee.

• In order to achieve this outcome, these inputs need to be properly approved and authorised.

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• The payroll phase, where the objective is to pay the right employees and payroll expenses the right amount at the right time.

• The accounts payable process ensures that payment are both accurate and timely.

• In order to ensure the integrity of financial reporting all accounts payable liabilities must be recorded accurately and promptly.

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HR MANAGEMENT AND PAYROLL CYCLE OVERVIEWAND KEY OBJECTIVES

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HR MANAGEMENT AND PAYROLL CYCLE OVERVIEWAND KEY OBJECTIVES

Documents Description

Employee personal details

Stores personal information of employees such as their name, age, sex, address and contact details.

Employee employment details

Stores employment related information of an employee such as employment start date, pay, employment award scheme and long service leave entitlements.

Selection criteria Details the job description and selection criteria relating to a particular job.

Job application Organization save job applications that are received in order to fill a present position or review for a future position.

Termination letter State the terms (date, paout, etc) of termination of employment.

Employee performance review

Employers us this form to review an employee’s job performance.

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HR MANAGEMENT AND PAYROLL CYCLE OVERVIEWAND KEY OBJECTIVES

Documents Description

Timesheet Displays the details of job hours and pay rates relating to a job or for particular time period.

Payroll This format pay document lists the hours worked by an employee, the rates of pay, tax withheld and the amounts deposited in the employee’s bank.

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DATA AND DECISIONS IN THE HR MANAGEMENTAND PAYROLL CYCLE

HR management and payroll cycle business decisions

When the HR management and payroll cycle is originally designed, or subsequently reviewed, a number of strategic decisions need to be made.

These decisions are typically made by senior management within the organization, and create the framework within which the policy operates.

To be effective, strategy-level process decisions should be congruent with the overaching business strategy.

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HR management and payroll cycle business decisions (cont..)

Strategy-level decisions would include the creation of policies such as:• Rate at which differing employees are paid.• Pay periods employees will be paid on.• How IT can be used to improve both the efficiency and accuracy of

payments to employees.

In addition to these strategy-level decision, there are a range of operational decisions that will be made every time the HR management and payroll cycle is enacted.

These operation decisions are typically made by middle management or operational staff and relate only to a specific instance of the cycle.

DATA AND DECISIONS IN THE HR MANAGEMENTAND PAYROLL CYCLE

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DATA AND DECISIONS IN THE HR MANAGEMENTAND PAYROLL CYCLE

HR & payroll cycle activities require access to:

• Employee master data

• Current period production cycle data

• Accounts payable data

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HR MANAGEMENT AND PAYROLL CYCLEDOCUMENTATION

FIGURE 12.2 HR management and payroll diagrams overview

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HR MANAGEMENT AND PAYROLL CYCLEDOCUMENTATION

FIGURE 12.3HR management and payroll cyclecontext diagram

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HR MANAGEMENT AND PAYROLL

CYCLEDOCUMENTATION

FIGURE 12.4HR management and payroll cycleLevel 0 logical diagram

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HR MANAGEMENT AND PAYROLL CYCLE ACTIVITIES ANDRELATED RISKS AND CONTROLS

HR Management and Payroll cycle activities:

• Maintain personnel records

• Alter employment status

• Authorise employment detail changes

• Calculate payroll Prepare payroll

− The payroll is prepared based on the information in the employment master files and the timesheets master file.

− These files have been updated previously by authorised individuals: the employment master files by the HR management staff and the timesheets master files by the production supervisor.

Prepare account payable− Account payable staff check the payroll for accuracy and then

establish the due dates for payment.− Payments to employees may be made on different dates than those

to taxation authorities and for employee deductions.

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HR MANAGEMENT AND PAYROLL CYCLE ACTIVITIES ANDRELATED RISKS AND CONTROLS

• Update pay recordsPrepare cash disbursements

− On the due date the payment should be automatically processed.

− Cheques could be printed based on a batch file generated from the payroll, or they may be hand written.

− Alternatively a direct debit is actioned by the bank to pay employees and other payroll expenses.

Distribute payslips− The payslips are distributed to the employee.

Update general ledger− Totals of the payroll and expenses yet to be paid are accrued

and then paid and updated in the general ledger.Continue..

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HR MANAGEMENT AND PAYROLL CYCLE ACTIVITIES ANDRELATED RISKS AND CONTROLS

Reconcile payments− Ensuring that the emount to be paid has been deposited in

an emprest account and the correct amounts of the employee salary and payroll expense yet to be paid.

Distribute leave forms− Ensuring all leave applications are updated.

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HR MANAGEMENT AND PAYROLL CYCLE ACTIVITIES ANDRELATED RISKS AND CONTROLS

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HR MANAGEMENT AND PAYROLL CYCLE ACTIVITIES ANDRELATED RISKS AND CONTROLS

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Continued to session 19

Thank you