Accounting, Information Technology, and Business Solutions, 2nd Edition

By Hollander, Denna, Cherrington Chapter 8

PowerPoint slides by:
Bruce W. MacLean, Faculty of Management, Dalhousie University

Other Business Processes

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Chapter Objectives

Identify the characteristics of other business processes and related IT applications. Identify the weaknesses of the traditional processes and their IT application architecture. Develop REAL models of the various business processes. Identify opportunities to improve the business processes.
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Process
Personnel
Authorize Rate and Deductions

Factory
n 3 2

2
n

Timekeeping
3
n 3 3 2 2 1 1

Cost Accounting
n 3 2

Payroll
n 3 2

Job time tickets

Employee Records
1

Job time tickets

Time cards

Supervisor Reviews
n 3 2

Job time 1 tickets

n 3 2

Approved time cards

Job time tickets

Reconcile & approve time cards 3

Time cards

Post to job order cost sheets

Verify pay rates & deductions

Accounts Payable
5

Cashier/Cash Disbursement
Sign check & deposit in imprest fund Prepare employee pay checks
n 3 2

Bank
Deposit check in imprest fund

Employees
6

Payroll Register

Payroll Register
Prepare cash disbursement documents

Paycheck
Imprest payroll account

Payroll register pay voucher, check

6
1

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Individual Checks

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Human Resource Business Process

Strategy & Objectives

To provide the human labor and expertise that an organization needs to function efficiently and effectively.
Uses an extensive amount of paper to capture, convey, store and report information.

Traditional Manual Payroll Process

Traditional Computerized Payroll Process

Collection of personal and payroll data entered into an employee payroll master file.

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Traditional Automated Payroll Process Flowchart

From Timekeeping Performed by a payroll clerk Performed in the Data Processing Department Attendance time cards Prepare batch total Attendance time cards Key-to-disk & edit
Exemption and summary report

Batch total

Personnel Department Performed by personnel clerks as soon as changes are approved

Payroll action records

Time data Enter change data Access employee records & make changes Run 1 - Sort by employee number Sorted time data Run 2 - Update employee file & prepare paychecks
Exemption and summary report

Employee payroll master file Irwin/McGraw-Hill

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Traditional Automated Payroll Process Flowchart

A
Employee payroll master file Run 2 - Update employee file & prepare paychecks
Exemption and summary report

Payment register

Paychecks

General Ledger transaction file

To Payroll Department
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To cashier

To general ledger procedure

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Information Needs in the Human Resource Business Process

Approve headcount

In many organizations approved headcount is a key tool for controlling labor cost. For example, a supervisor wishing to increase headcount must prepare the necessary paperwork to identify and justify the need for a new position. There is an extensive review process that requires the division manager, area controller, and executive vice president to approve the request. Only when all these approvals are obtained can the position be opened for hiring.
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Information Needs in the Human Resource Business Process

Hire employees

Organizations continue to need professional, support staff, and technical personnel in todays competitive, advanced business environment. Individuals agree to work in exchange for wages, benefits, and other rewards. Hiring is the process of matching the skills and interests of people with the needs of the organization. Important in the hiring process is an accurate description of the organizations needs. Not only must accurate projections be made of the number of individuals needed, but also organizations must develop job descriptions and skill requirements associated with each job position. Those responsible for hiring use the job descriptions and skill requirements as a basis for selecting new hires.
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Information Needs in the Human Resource Business Process

Training

Training requires:
an understanding of the current knowledge and skills of the people to be trained, identifying the desired skills and knowledge, and a program to provide what is currently lacking.

Maintaining a record of each employees training can provide important information in assigning employees to new jobs.

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Information Needs in the Human Resource Business Process

Assigning

Part of managements responsibility is to organize and direct the work of employees. Organizing involves identifying the activities to be performed, structuring the activities into jobs, and positioning the jobs into departments, project teams, or divisions. Competent individuals who have the skills, abilities, and training necessary to perform them must fill jobs. To effectively assign people to jobs, management must receive information on the operating events that must be performed, the skills required to perform them, and the skills, abilities, and training of each employee.
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Information Needs in the Human Resource Business Process

Compensating

Employee compensation may come in the form of a salary, commission, salary plus commission, rate per hour, or rate per piece (based on units of work). Most managers and top-level executives are paid a salary and perhaps a bonus depending on the profitability of the company. Manual-type work is typically paid by the hour with a premium rate for overtime hours. Overtime pay may be computed on a daily basis (any time over eight hours per day), or on a weekly basis (any time over 40 hours per week).
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Information Needs in the Human Resource Business Process

Evaluating

Performance evaluations serve several important functions in an organization:

They provide a basis for recognizing and rewarding performance. They guide personnel actions such as hiring, firing, and promoting. They provide individuals with information for their own personal development. They identify training needs for the organization.

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Information Needs in the Human Resource Business Process

Terminating

Terminating employees is the most undesirable of all operating events. Unfortunately, this has become an important event as many companies attempt to downsize or rightsize. Effectively performing each of the aforementioned events is important in avoiding problems with this event. Doing a quality job of hiring and training employees can reduce the likelihood of having to subsequently terminate them.

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REAL Model of the Human Resource Business Process

Propose Headcount Headcount List Review/ Approve Headcount Hire Employees Employees Train Employees Assign Employees Cash Pay Employees Terminate/Retire Employees
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Supervisor Planning Committee Hiring Officers Trainers

Payroll Employee

Sample Process Relationships

Other Financing Alternatives Cash Financing Business Process Goods and Services Acquisition/Payment Cash Process Cash Labor Materials Conversion Business Process Sales/Collection Process Labor

Cash

Labor
Human Resource Process

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Sample Equity Company Financing REAL Model

(1,1)

(1,1)
(1,1) Debt Financial Instruments (1,1) (1,1)

Approve New Loans

(0,*) (0,*) (0,*)

(1,1) (1,1) (1,1) (1,1) (1,1) (1,1) Financing Institution (1,1) Executive Committee Finance Employee (1,1) (1,1)

Borrow Money

(1,1)

Sell Stock

(0,*)
(0,*)

(1,1) (1,1) Cash

(0,*)

Receive Cash

(0,*)

(1,1)
(0,*) (0,*) (0,*)

Accounting Clerk (1,1)

(1,1)
(1,1) Asset Financial Instruments (1,1) (0,*) (0,*) Irwin/McGraw-Hill

Invest Excess Funds

Approve Principal & (0,*) Interest Payments (0,*) (0,*) Disburse Cash

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Sample Conversion Process Data Flows

Inputs
Conversion Process
Raw Materials Equipment Labor Products Services

Outputs

Acquire Input through:

Acquisition/Maintenance/Payment Process

Sell Outputs through:

Sales/Collection Process

Human Resource Process

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Flow of Resources - Manufacturing Process

Raw Materials
Acquired Used

Labor
Costs

Work In Process
Materials Labor Overhead

Finished Goods
Units Completed Units Sold

Units Completed

Equipment and Other

Allocated Amount

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Nichols Bottles Conversion Process Model

(1,*)

Raw Material Inventory

Work in Process Inventory

(1,*)

(0,*) (1,*)

Heat Glass Compound

(0,*)

(0,*)

(1,1)

Furnace Operators

(1,1)

(1,1) (1,1) (1,1) (1,*) (1,*) (1,*) (1,*) (1,*) (0,*)

Pour Glass into Molds

(0,*)

(1,1)

Pourers

Equipment

(1,*) (0,*)

Finish and Label

(0,*)

(1,1)

Finishers

(0,*) (1,*) (0,*)

Package Bottles

(0,*)

(1,1)

Packagers

Finished Goods Inventory

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(1,*) (1,*)

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Generic Overview of an Entire Business

Financial Instruments Acquire Financing Hire & Use EmployeeServices Convert/Build Products Sell Goods/ Services Receive Cash Employees Investors & Creditors Customers

Goods/Services Resources

Property, Plant, & Equipment

Cash

Purchase Resources Disburse Cash

Vendors

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Event Acquire financing

Resources Financing instruments

Agents Employees Investors Creditors Employees Vendors Employees Employees Vendors Employees

Acquire resources to produce goods/services Acquire employee services Acquire property, plant, and equipment Convert resources to finished goods or services for sale Sell goods or services

Inventory

Employee Resources Property, plant, and equipment Inventory

Inventory

Employees Customers Employees Customers Creditors Investors Employees Vendors Creditors Investors

Receive cash

Cash

Disburse cash

Cash

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