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 System
Source: http://www.harmony-solutions.com.au/overview2.htm
 Core HRM System
• Biographical data
 Name, address, employee id.
 Service history.
 Competencies.
• Establishment (Position) Data
Position title.
Requirements.
Position occupancy
History
 Recruitment Module
 Administer advertising of vacant positions
 Generate advices to applicants
 Archive unsuccessful applicant records
 Administer 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