Unit 19 -- Payroll October 16, 2017

Transaction Cycles Purchasing Cycle Revenue Cycle Payroll Cycle

Far More Danger Disbursing company money to employees Relatively few independent checks & balances Employees are familiar with the procedures Employees feel entitled Employees are friends with each other

Payroll Cycle Dealing with individuals, not “commerce”?

Payroll Cycle Dealing with individuals, not “commerce” Far more diversity between companies Different documents Different job titles Different reporting paths Different information flows

NOT FLOWCHART

President Operations Personnel Controller

President Treasurer VP Operations Controller Production Manager Director HR Sales Manager

President Treasurer VP Operations Controller Production Manager Personnel Manager Sales Manager

President Treasurer Controller VP Operations Production Manager Personnel Manager Sales Manager

President Operations Personnel Controller

Tri-Partite Segregation Human Resources, Personnel, etc. AUTHORIZATION TO HIRE SETUP & MAINTENANCE OF EMPLOYEES & PAY RATES LEGAL REQUIREMENT COMPLIANCE Controller’s Office: Payroll Department PAYROLL PROCESSING Production, Sales, Operations, All Other Depts. INITIATION TO HIRE SELECTION OF CANDIDATE ACTUAL WORK THE EMPLOYEE PERFORMS FOR PAY

Tri-Partite Segregation Human Resources, Personnel, etc. Controller’s Office: Payroll Department Production, Sales, Operations, All Other Depts.

Tri-Partite Segregation Human Resources, Personnel, etc. AUTHORIZATION TO HIRE SETUP & MAINTENANCE OF EMPLOYEES & PAY RATES LEGAL REQUIREMENT COMPLIANCE Controller’s Office: Payroll Department PAYROLL PROCESSING Production, Sales, Operations, All Other Depts. INITIATION TO HIRE SELECTION OF CANDIDATE ACTUAL WORK THE EMPLOYEE PERFORMS FOR PAY

Functional Supervisor Determines Need Functional Manager Human Resources Budget, Strategic Plan, Etc. Executive Management Advertises Position

Informs HR of which candidates to interview Human Resources Candidates Candidates Candidates Resumes Screening Best Resumes Functional Supervisor Schedule Interview Informs HR of which candidates to interview

Informs HR of hiring decision Hiring Decision Functional Supervisor Candidate Human Resources Interview Creates Offer/Contract Informs HR of hiring decision Hiring Decision Employment Offer/Contract Functional Supervisor Employment Offer/Contract Candidate

Functional Supervisor New Employee Human Resources (registration) I-9 W-4 Benefits Enrollment

Functional Supervisor New Employee Human Resources (registration) Employee Master File

Functional Supervisor Employee Payroll Time Sheet Enters Data Clock Card Hours Data

Functional Supervisor Employee Payroll Enters Data Production System Production System Hours Data

Functional Supervisor Payroll Employee Master File Human Resources Production System Time Sheet Hours Data Payroll Run

President VP Operations Controller VP Personnel Functional Supervisor Payroll Human Resources

Payroll Prodn System Time Sheet Hours Data Employee Master File Payroll Run Payroll Budget Payroll Budget Payroll Report Payroll Report Treasurer Functional Manager Payroll Report Controller Pay Stub Employee Form 941 Pay Check WithholdingDeposit Emp. Bank IRS

Payroll Prodn System Time Sheet Hours Data Employee Master File Payroll Run Payroll Budget Payroll Report Payroll Report Payroll Report Treasurer Functional Manager Payroll Report Controller Pay Stub Employee Form 941 Form 941 Pay Check WithholdingDeposit Emp. Bank IRS

Payroll Disburse-ment File Prodn System Time Sheet Hours Data Employee Master File Payroll Run Payroll Budget Payroll Report Payroll Disburse-ment File Treasurer Functional Manager Payroll Report Controller Pay Stub Employee Withholding Deposit and Form 941 Emp. Bank Net Pay IRS

Controller Payroll Report Deposit Receipt Bank Statement Bank Reconciliation

End of Year (after Dec 31 but before January 31) Payroll Payroll Records W2 W2 W-2 Transmit Employee IRS

Questions? Questions about a “batch-based” system?

Transaction Cycles Purchasing Cycle Revenue Cycle Payroll Cycle