Sec 12: Payroll Systems and Technology Flashcards
The payroll department’s customers include:
- Employees
- Other departments
- Upper management
- Federal, state and local government agencies
Interface
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. A PROGRAM THAT ALLOWS TWO SYSTEMS TO SHARE DATA.
Systems that use Interfaces
- Labor cost data collection
- Payroll bank accounts
- Direct Deposit
- Time and Attendance
- Accounts Payable
- General Ledger
- SSA
Integration
An integrated system eliminates duplicative data entry, makes better
use of available staff, eliminates timing issues, and reduces data discrepancies.
Departments that benefit from integration
- HR
- Benefits
- Accounting and Finance
- Other Systems
Service Provider
A service provider (i.e., outsourcing company) is an independent company that processes its clients’ payrolls for a fee
In House Payroll
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.
System Edit
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.
Name three commonly used system edits in payroll systems.
- Warning that a payment is being generated for a terminated employee
- Report for new hires
- Error message when no payment is generated for an active employee
- Error message for negative net pay
- Error message for negative deductions
- Report when compensation exceeds certain amounts
- Report for excessive overtime (or any overtime in some companies)
- Report when rate of pay changes
Periodic data auditing and sampling
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.
Batch controls
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
Personnel related security measure
- 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
System Security
- Limit system access.
- Secure files
- Develop audit trails
- Protect against computer “viruses”
- Require multi‑factor authentication
- Back up data regularly and store off site
Physical Plant Issues
- 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
Web-enabled defined
A web- enabled application is one that uses the internet as another means of accessing an organization’s data and the HRMS application logic itself. One example is an application that enables employees to see their paystub information from the employer’s payroll/human resources application through the internet.
Cloud Computing defined
Cloud Computing is simply the delivery of any computing process as a service rather than a product. Programs and data do not reside on the customer’s computers, but rather are stored “in the cloud” at a site controlled by the provider.
When selecting a new system, who should be included on the project team?
- Payroll
- Human resources
- Benefits
- Accounting
- Tax
- Budget/finance
- Data processing/MIS
- Facilities
What is the main disadvantage of using a service provider?
Slow response time to needed changes and emergency requirements.
A Request for Proposal (RFP) should include the following:
- The employer’s purpose in issuing the request
- Specific payroll information— size, frequency, union vs. nonunion, salaried and hourly
- Functional requirements of a new system now and in the future
- Number of fields required for earnings and deductions
- Whether human resources and benefits will be integrated with the payroll system and what interfaces
will be required - Training needs and whether this should be included in the bid
- Level of support (maintenance) expected
- Contract terms and conditions
- Instructions to service provider on how to submit proposal
-can be used to design an in-house payroll system
Common mistakes made during selection of a new payroll system include:
- Not including representatives of all the potential user departments
- Failing to provide enough time for project team members to work on their system selection duties
- Failing to prioritize needs and desires
- Making decisions without sufficient input
- Failing to consider all the costs associated with a new system
- Making on‑ site visits only to customers referred by a service provider
- Failing to thoroughly check for signs of obsolescence
- Failing to negotiate performance guarantees
- Not considering future company needs— shortsightedness
What is Business Process Outsourcing?
Is the outsourcing of end- to- end business processes and functions.
What is the initial step in selecting a new payroll system?
Put together a project team or task force
