Chapter 9

Question 1

Manual Payroll Systems

Answer 1

Used for small organizations or special payrolls such as senior executives

Spreadsheets typically used for registers, cheques manually written or typed

May use One-Writetm systems

Error prone and labour intensive

Question 2

Computerized Systems

Advantages

Answer 2

Computer systems can process large amounts of data, accurately.
Tables for calculation of with-holdings can be included with the computer software and are generally easy to install changes as legislative requirements change.
Output files can be created to provide data for other uses and then update other data files, such as automatically creating journal entries.
Input of information can be automated from other systems such as Time and Attendance record keeping. This simplifies input and improves accuracy.
Most systems provide some amount of customization to meet the needs of the employer.
Computer systems normally store data in standard file formats to facilitate system upgrades and transfer of information to third parties such as the Canada Revenue Agency or pension administrators

Question 3

Computerized Systems

Types of systems

Answer 3

Stand-alone – process payroll only
Integrated management systems (ERP)
Hybrid integrated systems (ERP with mixed “best of class” modules)
Out-sourced payroll systems, usually provide data formats for exchange to other systems used by employer

Question 4

Payroll Processing Steps

Answer 4

Employer (company) set-up
Legal Name and address, BN, Rates for EI, Vacation, EHT, formats, benefits, earning types, deductions, accounts.

Employee data
Earnings (types and rates), deductions, TD1 exemptions, SIN, personal information, vacation paid or accrued, banking information.

Pay cycle data
Time card information, Exceptions for employees (this pay)
Hours, OT, bonuses, commissions, holiday pay

Reporting
Accounting, remittances
Year end reconciliations

Question 5

Systems Considerations

Answer 5

When choosing a payroll system the employer must consider:
The number of employees currently and in the foreseeable future.
The complexity of payroll related to;
Number of pay cycles.
Types of earnings
Deductions allowed.
Number of provinces with employees.
The capability of the payroll administrator.
The degree of integration desired to other company systems, if any.
The in-house support capability for the computer system.
The extent to which privacy is a concern.