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APA – Fundamentals of Payroll

APA – Fundamentals of Payroll. Chapter 2 – Payroll Systems. February 20, 2010. Index. 2.1 – The Payroll System 2.2 – Processing Methods 2.3 – Interfaces 2.4 – Controls 2.5 – External Audits 2.6 – Paying Employees. 2.1 – The Payroll System.

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APA – Fundamentals of Payroll

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  1. APA – Fundamentals of Payroll Chapter 2 – Payroll Systems February 20, 2010

  2. Index 2.1 – The Payroll System 2.2 – Processing Methods 2.3 – Interfaces 2.4 – Controls 2.5 – External Audits 2.6 – Paying Employees

  3. 2.1 – The Payroll System • Computerized Payroll System: Improves efficiency of payroll department and assists with: 1. Compliance, Timely and Accurate Pay, Reporting, Record Retention, Security and Control • Components: • Hardware • Software • Network (provides communication) • Operators

  4. 2.2 – Processing Methods • Processing Methods • Batch – System codes and combines items into groups of similar data. Typically do not have access to data as the batch is being run. • Real-time – System runs calculations and updates records as the information is being entered. Results are available immediately. • Additional Methods: • ESS – Employee Self Service • MSS – Manager Self Service

  5. 2.3 – Interfaces The term Interface refers to the capability of two data processing elements to communicate. • HR/Payroll • Benefits • Data Collection (job costing, labor, equipment) • Bank (Check Reconciliation/ACH) • Time and Attendance • General Ledger • Integration • Reconciliation

  6. 2.4 – Controls • Edits • Balancing and Reconciliation • Documentation • Data Auditing and Validating • Batch Controls • Correction Procedures • Accumulator Totals • System Updates/Upgrades • Security

  7. 2.5 – External Audits Primary focus of External Audits is to determine the following: • Whether the financial statements are appropriate • Whether the financial assets are being properly safeguarded • Whether there are risks to the financial well-being that will affect the future balance sheets or income statements Internal Benefits of an Audit • Don’t be afraid of an audit. Use the process as a time to review your controls and procedures. • Discuss opportunities for improvement to controls and procedures with the auditor. Their agreement may assist you with your management.

  8. 2.5 – External Audits – cont. Frequently Asked Auditor Questions • Where are the blank checks stored? • Who signs checks? • Who approves payroll? • Where are files retained? • How is the accuracy of payroll verified? • Who reconciles the payroll checking account? • How do you ensure that taxes are withheld accurately? • Are timely deposits made? • Are managers complying with new tax rules? • Are all payroll transactions properly recorded in the general ledgers? • Are accrual accounts handled properly?

  9. 2.6 – Paying Employees • Paying by Check • Paying by Direct Deposit • Direct Deposit Process • Late Direct Deposit issues • Stopping Direct Deposit • Reversing Direct Deposit • Federal Bank Holidays • Paying by Payroll Card • Regulation of Payment Timing • Unclaimed Wages

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