Chapter 15: Payroll Flashcards
Payroll Cycle
the end to end processes necessary to obtain labor services in exchange for cash.
get cash get labor services
5 steps to payroll cycle
- hire terminate, promote employees
- receive services
- process payroll
- disburse payroll
- pay taxes and benefits
HRM departement is responsible for
updating the payroll master database for internally initiated changes related to employment
Payroll department updates
information about tax rates and other payroll deduction when it receives notification of changes from various government units and insurance companies.
unauthorized changes to payroll master data
- restrict access
2. segregation of HRm department updates master data but only payroll department issues checks
Inaccurate updating of payroll manster data
- data processing integrity controls
2. review of all changes to master payroll data
inaccurate time and attendance data
- source data automation for data capture
- biometric authentication
3, segregation of duties (reconciliation of jot time tickets to time cards) - supervisory review
Payroll register
lists each employee’s gross pay, payroll deductions, and net pay in a multicolumn format
deduction register
lists the miscellaneous voluntary deductions for each employee
errors in processing payroll
- data processing integrity controls
- supervisory review of payroll register and other reports
- issuing earnings statements to employees
- review of IRS guidelines to ensure proper classification of workers as either employees or independent contractors
batch totals
calculated at the time of data entry and then checked against comparable totals calculated during each stage of processing. (hash totals)
Cross-footing the payroll register
total of the net pay column should equal the total of gross pay less total deductions.
payroll clearing account
general ledger account that is used in a two step process to check the accuracy and completeness of recording payroll costs and their subsequent allocation to appropriate cost centers.
who approves the payroll register
AP
what does AP do
approve the payroll register
what two docs should be reviewed before cashier prepares and signs check
payroll register and disbursement voucher,
theft of fraudulent distribution of paychecks
- restrict physical accesses
- pre numbering and periodically account for all payroll checks
- require proper supporting docs for all paychecks
- segregation of cashier vs. AP.
- restrict acces to payroll master database
- verify all employee identities
Failure to make required payments
configure of system to make required payments using current instructions from IRS
inaccurate payments
- process integrity controls
- supervisory review of reports
- employee review of earning statement
Payroll service bureau
maintains the payroll master data for each of its clients and process payroll for them
professional Employer Organization (PEO)
processes payroll but also provides HRM services such as employee benefit design and administration,.