Course Name : M0034 - Information and Business Process Year : 2011

The HR management and Payroll Cycle

Session 17-18

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. Bina Nusantara

HR MANAGEMENT AND PAYROLL CYCLE OVERVIEW AND 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 OVERVIEW AND KEY OBJECTIVES

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HR MANAGEMENT AND PAYROLL CYCLE OVERVIEW AND KEY OBJECTIVES

Documents Employee personal details Employee employment details Selection criteria Job application Description Stores personal information of employees such as their name, age, sex, address and contact details. Stores employment related information of an employee such as employment start date, pay, employment award scheme and long service leave entitlements. Details the job description and selection criteria relating to a particular job. Organization save job applications that are received in order to fill a present position or review for a future position.

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

Employers us this form to review an employees job performance.

HR MANAGEMENT AND PAYROLL CYCLE OVERVIEW AND KEY OBJECTIVES

Documents Timesheet Payroll Description Displays the details of job hours and pay rates relating to a job or for particular time period. This format pay document lists the hours worked by an employee, the rates of pay, tax withheld and the amounts deposited in the employees bank.

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DATA AND DECISIONS IN THE HR MANAGEMENT AND 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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DATA AND DECISIONS IN THE HR MANAGEMENT AND PAYROLL CYCLE

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.
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DATA AND DECISIONS IN THE HR MANAGEMENT AND 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 CYCLE DOCUMENTATION

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FIGURE 12.2 HR management and payroll diagrams overview

HR MANAGEMENT AND PAYROLL CYCLE DOCUMENTATION

FIGURE 12.3 HR management and payroll cycle context diagram

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HR MANAGEMENT AND PAYROLL CYCLE DOCUMENTATION

FIGURE 12.4 HR management and payroll cycle Level 0 logical diagram

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HR MANAGEMENT AND PAYROLL CYCLE ACTIVITIES AND RELATED RISKS AND CONTROLS
HR Management and Payroll cycle activities: Maintain personnel records Alter employment status Authorise employment detail changes Calculate payroll Prepare payroll

Prepare account payable

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. 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 AND RELATED RISKS AND CONTROLS

Update pay records Prepare 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.

Totals of the payroll and expenses yet to be paid are accrued and then paid and updated in the general ledger.
Continue..

Update general ledger

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HR MANAGEMENT AND PAYROLL CYCLE ACTIVITIES AND RELATED 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. Ensuring all leave applications are updated.

Distribute leave forms

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HR MANAGEMENT AND PAYROLL CYCLE ACTIVITIES AND RELATED RISKS AND CONTROLS

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HR MANAGEMENT AND PAYROLL CYCLE ACTIVITIES AND RELATED RISKS AND CONTROLS

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Continued to session 19

Thank you

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