Page 37 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
paychecks to the department supervisors to see if any fake names or the
names of departed employees crop up. Finally, you can also spot fake
employees by handing out checks directly to employees after they show
some form of identification. Not all of these controls are necessary, but
you should select those that make the most sense for a company’s specific

circumstances.

Overview of the In-House Computerized
Payroll Process
A payroll system that is just as popular as outsourcing is the in-house com-
puterized system.Payroll software is very inexpensive,as it is now bundled

with accounting software that costs just a few hundred dollars. More
comprehensive systems, for use with large numbers of employees, are
much more expensive, but are a cost-effective solution for large entities.
The basic process flow for an in-house computerized payroll process
is shown in Exhibit 1.4. A fully automated process involves the review
and verification of hours worked and other changes as entered by the
employees, followed by the processing and printing of payroll reports,
filing of direct deposit information and payroll taxes, and the distribu-
tion of paychecks.

The flowchart assumes a complete automation of all key payroll
functions. For example, a computerized timekeeping system is assumed.
This system, as described in Chapter 2, requires employees to run a
badge through a time clock that can reject the scan if the employee is
clocking in at the wrong time or is attempting to work during an unau-
thorized overtime period. By using such a system, the payroll process is
considerably reduced at the front end, with the payroll staff only having

to investigate missing badge scans. The process flow also assumes that
employees can make their own deduction and address changes through
an interface to the payroll software, so that the payroll staff only has to

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