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 Data 2. Validate Time and Attendance Data 3
1. Update Master Payroll Data 2. Validate Time and Attendance Data 3. 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 b. Supervisory review

6. 4. Disburse Payroll 5. 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 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)