Page 22 - Essentials of Payroll: Management and Accounting

Cr eating a Payr oll System
4. Summarize wages due. This generally is a straightforward process of
multiplying the number of hours worked by an employee’s standard
wage rate.That said, it can be complicated by overtime wages, shift
differentials, bonuses, or the presence of a wage change partway
through the reporting period (see Chapter 5,“Compensation”).

5. Enter employee changes. Employees may ask to have changes made

to their paychecks, typically in the form of alterations to the
number of tax exemptions allowed, pension deductions, or med-
ical deductions. Much of this information must be recorded for
payroll processing purposes,since it may alter the amount of taxes
or other types of deductions (see Chapter 8,“Payroll Deductions”).

T IPS &T ECHNIQUES

Compiling time cards, determining who earned overtime hours, and
gathering supervisory approval of those hours is a common last-
minute rush job prior to completing the payroll. One of the major pay-
roll bottlenecks is locating supervisors, who have other things to do
than approve overtime hours. One alternative is to skip the super-
visory approval and instead report back to supervisors after the
fact, so they can see the hours charged on a trend line of multiple
pay periods. If there are employees who continually record an exces-
sive amount of overtime, this information becomes abundantly clear
in the report. Supervisors can then use this information to work with
specific repeat offenders, possibly issuing a blanket order never to
work overtime. A sample of this report is shown in Exhibit 1.1, which
lists overtime hours worked for the past six months for a group of
employees. Note that the hours of Mr. Grammatic clearly exceed
those of the other employees, making him a target for supervisory
action. Also, overtime hours tend to be similar for people working in
the same area; notice in the report how everyone except Mr.
Grammatic works roughly the same amount of overtime in the same
periods. Clearly, there is a potential overtime problem highlighted by
the report that requires further investigation.

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