Page 70 - Essentials of Payroll: Management and Accounting

Accumulating T ime W orked
taking this approach:First,exporting payroll data anywhere else in a com-
pany makes it easier for unauthorized employees to see confidential payroll
information;second,the payroll system cannot generate many meaningful
reports without data from the timekeeping system,whereas the timekeep-

ing system can generate a number of reports that do not need labor cost
data (see the earlier section on timekeeping reports). Thus, it may be
better to leave the payroll data where it is and instead work on an auto-
mated interface that imports timekeeping data into the payroll system.
Not only is it entirely possible that any of the problems described in
this section will occur, but it is also possible that they will go undetected
for a substantial period of time. To avoid this happening, the internal

auditing department should be asked to conduct a periodic review of the
controls surrounding the timekeeping and payroll systems, as well as a
test of transactions to see if any problems can be spotted. The resulting
audit report can be used to further tighten the controls around these
data collection systems.

I N THE REAL WORLD
Reducing the

Cost of Timekeeping

A routine analysis of the system costs at a large manufacturing facility
discovered that the cost of administering the company’s direct labor
timekeeping system appeared to be inordinately high. Approximately
50 percent of the entire cost accounting function was devoted to the
collection and interpretation of data related to direct labor. The con-
troller asked a cost accountant, Ms. Anna North, to investigate the
situation and recommend a revised system that would generate
usable information, while costing as little as possible to administer.
The cost accountant’s plan for this analysis was to, first, determine
the level of detailed information collected by the timekeeping system,

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