Sec 12: Payroll Systems and Technology

Question 1

The payroll department’s customers include:

Answer 1

• The employees it pays
• Other departments in the company (e.g., human resources, benefits, accounting)
• The company’s leadership, from first line supervisors to top executives
• The federal, state, and local government agencies to which withheld income and employment taxes, child support payments, etc., are paid and reported

Question 2

Interface

Answer 2

When a system uses an interface, important data is copied or synchronized to a central repository, or to another system, which may be one of the original systems or a separate database. A central repository allows the user to access the important data in
one location.

Question 3

Systems that use Interfaces

Answer 3

• Labor cost data collection
• Payroll bank accounts
• Direct Deposit
• Time and Attendance
• Accounts Payable
• General Ledger
• SSA

Question 4

Integration

Answer 4

An integrated system eliminates duplicative data entry, makes better
use of available staff, eliminates timing issues, and reduces data discrepancies.

Question 5

Departments that benefit from integration

Answer 5

• HR
• Benefits
• Accounting and Finance
• Other Systems

Question 6

Service Provider

Answer 6

A service provider (i.e., outsourcing company) is an independent company that processes its clients’ payrolls for a fee

Question 7

In House Payroll

Answer 7

As the name suggests, an in- house computerized payroll system is located on company premises, with the hardware controlled by the employer. This gives the employer greater ability to design its own application set and security for the system. Also, the system is operated by the employer’s own employees— programmers, systems analysts, data- entry personnel, operators, etc.

Question 8

System Edit

Answer 8

A system edit is a warning or alert built into the system that checks for errors and either corrects the error or notifies the operator that something may be wrong.

Question 9

Periodic data auditing and sampling

Answer 9

Periodic audits of a sample of the data can identify such data invalidity problems. It is up to the employer to determine the sampling parameters to ensure validity.

Question 10

Batch controls

Answer 10

Batching data into groups of similar data, and then doing a reconciliation of data input totals against delivered batch totals will ensure that amounts have been entered correctly

Question 11

Personnel related security measure

Answer 11

• Segregation of job duties—critical job processes should not be managed from start to finish by one employee.
• Rotation of job assignments
• Paychecks go only to employees
  where written authorization has been obtained.
• Conduct “physical payouts”—requiring employees to show identification to receive their paychecks or pay statements, to discourage the creation of “phantom employees.”
• In small payroll departments—where segregation and rotation are impractical, some payroll tasks should go to other departments, such as accounting.
• Background checks

Question 12

System Security

Answer 12

• Limit system access.
• Secure files
• Develop audit trails
• Protect against computer “viruses”
• Require multi‑factor authentication
• Back up data regularly and store off site

Question 13

Physical Plant Issues

Answer 13

• Climate‑controlled rooms
• Keep computers from overheating
• Do not store in cold area
• Protect against power surges
• Keep dirt out of components
• Keep the humidity down
• Check for adequate power
• Lock computer screens and personal computers/laptops