Page 69 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
use a bar-coded or magnetically encoded employee number that they
carry with them on a card, which ensures that they enter the same
employee code every time.A weaker control is to post a list of bar-coded
or magnetically encoded employee numbers next to each data entry

station—it is weaker because an employee can still scan someone else’s
code into the terminal.If a paper-based system is used,an employee nor-
mally writes his or her employee number at the top of a time report,
which is then entered by a data entry person into the computer at a later
date. The problem with this approach is that the data entry person may
enter the employee number incorrectly, which will charge all of the data
on the entire time report to the wrong employee number.Again,an inter-

active timekeeping system is crucial for the correct entry of information.
Yet another problem is that the cost per hour that is used by the time-
keeping system may not be the same one used in the payroll system.This
problem arises when there is no direct interface between the timekeeping
and payroll systems, meaning that costs per hour are only occasionally
(and manually) transferred from the payroll system to the timekeeping
system. This results in costs per hour on timekeeping reports that are
generally too low (on the grounds that employees generally receive pay
increases, rather than decreases, so that any lags in data entry will result in

costs per hour that are too low). One way to fix this problem is to create
an automated interface between the payroll and timekeeping systems, so
that all pay changes are immediately reflected in any timekeeping
reports that track labor costs. It is important that this interface be fully
automated, rather than one that requires operator intervention, other-
wise there is still a strong chance that the cost data in the timekeeping
system will not be updated, due to operator inattention.

An alternative approach is to keep all labor costs strictly confined with-
in the payroll system and to import timekeeping data into it, rather than
exporting payroll data to the timekeeping system.There are two reasons for

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