Page 35 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
EXHIBIT 1.2
The Outsourced Payroll Process

Notify File File
employees change forms time cards
about missing in employee separately.
hours. folders.
Review hours Enter hours and Verify totals Receive Create and post
from payroll changes with paychecks and OK? Yes journal entries File payroll
timekeeping into supplier’s supplier or reports from for payroll reports.
system. system. online. supplier. transactions.
No
Obtain
supervisory Distribute
approval of
overtime hours paychecks.
worked.

Collect manual
paycheck
information.

Collect
employee
change forms.

that highlight hours that were not logged in by employees, thereby
eliminating two steps from the data collection part of the process.
Second, some payroll suppliers sell computerized timekeeping systems
that link directly into their systems,so there is no need to manually load
this information into the supplier’s system (or call it in to a data entry
person). Third, a company can pay the supplier to create customized

summary-level reports that can be used as the foundation for journal
entries, which eliminates additional work. Finally, some suppliers now
issue payroll reports on compact disc (CD), which nearly eliminates the
filing chore. By taking advantage of these additional outsourcing fea-
tures, the payroll process can become a very efficient system.
Controls over the outsourced payroll process are fewer than required
for other systems, because there is no need to control the check stock

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