Chapter 6 The Expenditure Cycle Part II: Payroll Processing and

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Presentation transcript:

Chapter 6 The Expenditure Cycle Part II: Payroll Processing and Fixed Asset Procedures 1

DFD of Payroll Procedures

Payroll Controls Transaction authorization - the personnel action form is important in preventing: terminated employees from receiving checks wage rates from being improperly changed for current employees 30

Payroll Controls Segregation of Duties - timekeeping and personnel functions should be separated Supervision - need to monitor employees to ensure they are not “clocking in” for one another 30

Payroll Controls Accounting Records - audit trail includes: time cards job tickets disbursement vouchers labor distribution summary payroll register subsidiary ledger accounts general ledger accounts 31

Payroll Controls Access Controls - need to prevent employees from having improper access to: accounting records, such as time cards which can be altered unsigned checks 32

Payroll Controls Independent Verification: verification of time cards distribution of paychecks to authorized employees verification of accuracy of payroll register by accounts payable general ledger reconciles the labor distribution summary and the payroll disbursement voucher 33

Computer-Based Payroll Systems Payroll is well-suited to batch processing and sequential files, since a majority of the employees on the master file will receive a paycheck every pay period. The computer program performs the detailed record-keeping, check-writing, and general ledger functions. 34

Human Resource Management (HRM) Systems A re-engineered IT that captures and processes a wide range of personnel-related data, including: employee benefits labor resource planning employee skills pay rates and deductions evaluations payroll 35

Key Features of HRM Systems Personnel - can make changes to the employee file in real time Cost Accounting - enters job cost data either daily or in real time Timekeeping - enters the attendance file daily Data Processing - still uses batch processing and prepares all reports, the checks, and updates the general ledger 37

Reengineering Payroll--Before

Reengineering Payroll--After

The Fixed Asset System (FAS) Fixed Assets - property, plant, and equipment used in the operation of a business 23

Life of a Fixed Asset Decline in asset’s service potential 2. Depreciation. 3. Subsequent expenditures. 1. Acquisition of asset. 4. Disposal of asset. Asset cost $ Decline in asset’s service potential Cost Salvage value Time (useful life)

DFD of Fixed Asset System