Page 98 - Essentials of Payroll: Management and Accounting

Payr oll Pr ocedur es and Contr ols
I N THE REAL WORLD
Reducing Technology

to Improve Results

A sheet metal processing facility used a data entry software pack-
age to enter payroll changes to the payroll database, which was
maintained by an outside supplier that processed all payrolls and
printed checks for the company. One year, a number of payroll clerks
came and went, resulting in a declining knowledge of how the data
entry software worked. By the end of the year, the newest payroll
clerk had only the most elementary knowledge of how to use the
system, resulting both in widespread payroll processing errors and
employees who were irritated because their paychecks were never
correct. The problem was exacerbated by the lack of a procedure for
this key function, which could only be created with difficulty, since
no expert was available to write the procedure. To resolve the prob-
lem, the controller abandoned the more complex data entry soft-
ware and instructed the clerk to simply call the supplier just before
each payroll and tell the supplier’s data entry staff which changes
to make. Though this was technically a regression in the form of
data entry used, the controller succeeded in matching the skill set
of the payroll staff to the method of updating the database of pay-
roll information. The change was a success, and payroll problems
immediately declined.

goals of procedures and controls—efficiency versus asset control—by
balancing the need for additional streamlining with any resultant loss of

control. This is a balancing act and there is no one way to achieve it,
since it will be based on the number of company locations, the skill
level of the staff, the department’s organizational structure, and other
intangible factors. Also, once the payroll manager strikes a balance
between the efficiency and control objectives, this issue must be revisited
time and again, since the manner in which the payroll department

71