The Human Resources Management and Payroll Cycle

The HRM / payroll cycle information system consists of two related, but separate, subsystem:
HRM and payroll . the HRM system records and processes data about the activities of
recruitment, hiring, training, assigning, evaluating, and dischargingemployees. The payroll
system records and processes data used to pay employees for their services.

The Human Resources Management (HRM) / Payroll Cycle is recurring set of bussines
activities and related data processing operations associated with effectively managing the
employee workforce . the more important tanks include the folloeing :

1. Recruiting
2. Training
3. Job assigment
4. Compensation
5. Performance evaluation
6. Discharge of employes due to voulentary or invoulentary termination

The HRM system performs the other five talks . in way companies , these two system
organizationally separate . the HRM system is usually the responsibility of the director of
human resources , where as the controller manages the payroll system.

The three basic functions the AIS provides in the HRM/ payroll cycle are :

1. Processing transactional data about employee activities

2. Safeguarding the organization’s asstes
3. Providing information for decision making

HRM payroll cycle information system

ERP system supports the HRM / payroll cycle. The HRM related activities and the collection
of information about the use of employee time accour daily.
OVERVIEW OF HRM PROCESS AND INFORMATION NEEDS

Organizational succes depends on skilled and motivated employees because their knowledge
and skills effect the quality of the goods and services provided to customers . even in
manufacturing firms , where direct labor costs represent only a fraction of total direct cost,
employees are key cost driver in that quality of their work affects bots overall productivity
and product defect rates.

Knowledge management system not only serve as a directory identfying the areas of
experties processed by individual employees, but also capture and store that knowledge so
that it can significanly improve productivity. Recognizing the value of employees knowledge
and skills help companies better under stands the true cost associated with the excersive
turnover . consequently, organization that experience below industry , avarage turnover rates
reap considerable cost savings compared to rivals with higher turnover rates.

Payroll cycle activites

Context Diagram of Payroll Portion of HRM/Payroll Cycle

The HRM system department provides information about hiring , terminations , and payrate
changes due to raises and promotion. Employees initiate changes in their dicretionery
deductions. The various department provide data about actual hourse employees work.

What are the basic activites performed in the payroll cycle

1. Update master payroll file

2. Update tax rates and deductions
3. Validate time and attendance data
4. Prepare payroll
5. Disburse payroll
6. Calculate employer – paid benefits and taxes
7. Disburse payroll taxes and other deductions
Update Payroll Master File
Updating the payroll master file to reflect various types of payroll changes : new
hires,terminations, changes in pay rates, or changes in discretionary withholdings.

Update Tax Rates and Deducations

Updates information about tax rates and other withholdings.

Update payroll master database

The first activity the HRM / payroll cycle involves updating the payroll master database to
reflect various types of internally initiated chages :

- New hires
- Terminations
- Changes in retes
- Changes in directionary witholdings
Process the HRM department is responsible for updating the payroll master database for
internally initiated chauges related to employment , whereas the payroll department updates
information about tax rates and other payroll deductions when it receives notifications of
changes from various government units and insurance companies.

VALIDATE TIME AND ATTENDANCE DATA

• Pay Schemes : for those paid on an hourly basis, mos companies use an employee time
card,which records the employee’s arrival and departure times for each work shift and totals
the hours worked during a pay period.
• Procedure : The payroll departement is responsible for validating employee time records.
• Opportunities for Using Information Technology : Payroll processing can be made more
efficient by collecting employee time and attendance data electronically.

Process : how employee time and attendance data is collacted differs depending in the
employees pay status . for employee pain on an hourly basis, many companies use a time a
card to record the employees daily arrival and departure time.

The job data ticket data are used to allocated labor cost among varies department, cost
center, and productions jobs

Designing Effective Bonus Pay Schemes

1.Attainable goals
2.Controllable goals
3.Goals congruent with corporate objectives
4.Measurable goals
5. Periodic review of goals
Prepare Payroll Procedures
1.The payroll transaction file is sorted by employee number.
2.The sorted time data file is then used to prepare employee paychecks.
3.All payroll deductions are summed and the total is subtracted from gross pay to obtain net
pay. Payroll deductions fall into two broad categories: payroll tax withholdings and voluntary
deductions.
4.The payroll register and employee paychecks
are printed

PREPARE PAYROLL

Lists three types of data processing errors can lead to penalities if the errors result in failure
the proper amount of payroll takes due the government

1. Batch total
Even advanced HRM / payroll system will continue to use batch processing for
payroll
2. Cross footing the payroll register
The total of the net pay column should equal the total of gross pay less total
deductions.
3. A Payroll clearing account
4. The payroll clearing accounts is a general ledger account that is used in a two steps
process to check the accuracy and completeness of recording payroll cost and their
subsequent allocations to appropriates cost center

Control Objectives, Threats, and Procedure

1. All payroll transactions are properly authorized.
2. All recorded payroll transactions are valid.
3. All valid : authorized payroll transactions are recorded.
4. All payroll transactions are accurately recorded.
5. Applicable government regulations regarding. remittance of taxes and filling of payroll and
HRM reports are met.
6. Assets (both cash and data) are safeguarded from loss or theft.
7. HRM/Payroll cycle activities are performed efficiently and effectively.

The payroll system must be designed to collect and integrate cost data with other types of
information in order to enable management to make the following kinds of decisions:
• Future work force staffing needs
• Employee performance
• Employee morale
• Payroll processing efficiency and effectivenes
RESUME