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The Human Resources Management and Payroll Cycle

The Human Resources Management and Payroll Cycle. Chapter 15. Learning Objectives. Describe the major business activities and related information processing operations performed in the human resources management (HRM)/payroll cycle.

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The Human Resources Management and Payroll Cycle

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  1. The Human Resources Management and Payroll Cycle Chapter 15

  2. Learning Objectives • Describe the major business activities and related information processing operations performed in the human resources management (HRM)/payroll cycle. • Discuss the key decisions to be made in the HRM/payroll cycle and identify the information needed to make those decisions. • Identify the major threats in the HRM/payroll cycle and evaluate the adequacy of various internal control procedures for dealing with them.

  3. Human Resource Management Process Recruit and hire new employees Training Job assignment Compensation (payroll) Performance evaluation Discharge of employees (voluntary or involuntary)

  4. Payroll Cycle Activities • Update payroll master data • Validate time and attendance data • Source document: time sheets • Prepare payroll • Payroll register and deduction register • Disburse payroll • Disburse taxes and miscellaneous deductions

  5. 1. Update Master Payroll Data2. Validate Time and Attendance Data3. Prepare Payroll Threats Controls • Unauthorized changes to payroll master data • Inaccurate updating of master data • Inaccurate time and attendance data • Errors in processing payroll 1 a. Access controls and segregation of duties 2 a. Data processing integrity controls 3 a. Supervisory review b. Source data automation for data capture 4 a. Data processing integrity controls b. Supervisory review

  6. 4. Disburse Payroll5. Disburse Payroll Taxes Threats Controls • Theft or fraudulent distribution of paychecks • Failure to make required payments • Untimely payments • Inaccurate payments 1 a. Restrict access to blank payroll checks and check signing machine b. Use separate account (imprest fund) 2 a. Configure system to make automatic payments on time 3 a. Configure system to make automatic payments on time 4 a. Process integrity controls b. Supervisory review

  7. Reasons to Outsource Payroll • Reduce costs • Cost of processing and minimize errors • Broader range of benefits • Administration of benefits • Free up computer resources

  8. Key Terms • Human resource management (HRM)/payroll cycle • Knowledge management systems • Time card • Time sheet • Payroll register • Deduction register • Earnings statement • Payroll clearing account • Flexible benefits plan • Payroll service bureau • Professional employer organization (PEO)

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