Page 97 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
which it is being put. For example, a control that measures the
cycle time of a manufacturing machine may no longer be needed
as a control point, but may be an excellent source of information
for someone who is tracking the percentage utilization of the

equipment. In these cases, it is best to determine the value of the
control to its alternate user before eliminating it. It may be nec-
essary to work around the alternate use before the control point
can be removed.

Repeat this control evaluation process whenever there is a significant
change to a process flow. Even if there has not been a clear change for
some time, it is likely that a large number of small changes have been
made to a process, whose cumulative impact will necessitate a controls
review.The period of time between these reviews will vary by industry,
since some have seen little process change in many years, while others

are constantly shifting their business models, which inherently requires
changes to their supporting processes.
If there have been any significant changes to a business model, such
as the addition of new technology,the implementation of different types
of employment models, the opening of new company locations, or a
shift to outsourcing or contracting out various types of labor, conduct a
complete review of all associated process flows both prior to and imme-

diately after the changes, so that unneeded controls can be promptly
removed or so that weak controls can be enhanced.

Summary
Procedures and controls are critical components of the payroll process.
Procedures are designed to increase the efficiency of the department by
standardizing task steps; controls can have the opposite effect, by increas-
ing the number of tasks in the procedures in order to ensure that there

is no loss of assets. The payroll manager must reconcile the conflicting

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