Chapter 6

James A. Hall, AIS 6th Edition

Prepared By:
Guinto, Guia Leighanne C.
Liwanagan, Joshua G. Submitted to:
Palado, Micah L. Prof. Leandro Fua
C o n t e n t s The Physical Computer-Based
R e p o r t
01 Payroll System
03 Payroll System

The Conceptual
The Conceptual
02 Payroll System
04 Fixed Asset
System

The Physical
05 Fixed Asset
System
 14th Century
Bookkeeping

Bookkeeping meant incorporating all business

finances – including keeping track of payroll, or During this time, businesses started 20th
outsourcing payroll management. the
how much they paid their employees. Tax-
creation of automated payroll systems
Century
paying also started becoming a company
responsibility as tax laws increased. and payroll companies was brought Business
about
Payroll
Payroll as we know it has become a
more personalized service designed to
meet unique business needs.

21st Century
Payroll Solutions
 Register to
Government
Read Labor Code Agencies
And
Build
Set Policies
Database
NET PAY Learn Determine
Payroll Payroll
Process
RF1 Frequency
R3 and Method
1604-CF
Manual or
Software or
Outsourcing
 • Identify employees authorized to
Responsible for all receive a paycheck
employee services. This • Reflect changes in status,
department’s duties number of dependents, hourly
include attracting, pay rates, payroll deductions, and
maintaining and job classification.
motivating employees • Activate new employees
• Termination of employees
while ensuring an
In addition, based on Missouri State
organization’s goals are University (2020)

Payroll Department
met and values are • Report appointments
upheld (Friend, 2018). • Record action in the individual's
personnel file.

*Details after the next 5 slides*

 Manual

Personnel Action Form on

Increasing Employee’s Salary
Sample Template of Personnel
Action Form
 Job tickets capture the time that
individual workers spend on each
production job.

*Details after the

next 2 slides*

See DFD again*

a group within a
business that is
responsible for
the manufacturing
of goods (Bragg,
2018).

*Details after the

Time cards capture the time the next 3 slides*

employee is at work and a formal

record of daily attendance.
Job Tickets
Time Cards
From production departments' job ticket, update
the WIP account. After cost accounting allocates
labor costs to the WIP accounts, the charges are
summarized in a labor distribution summary and
forwarded to the general ledger function.
01 Prepares the payroll register.

Enters the information into the

02
employee payroll records.

03 Prepares employee paycheck

Sends the paychecks to the distribute

04 paycheck function.
Files the time cards, personnel action
05 form, and copy of the payroll register.
01
*Examples on the next
slides*
01

Payroll Registers
02 Employee Payroll Records
03 Payroll Checks
After Preparing Payroll, they can
either distribute paycheck already
or prepare accounts then prepare
cash disbursement

A form of payroll fraud

involves submitting
timecards for non existent
employees. To prevent this
any companies, use a
paymaster to distribute the
paychecks to employees.
AP clerks reviews the payroll
register for correctness.
Prepares copies of a cash
disbursement voucher to be
sent to cash disbursement
department. A copy of the
disbursement voucher is
sent to the general ledger
function.
the cash disbursements
function prepares a single
check for the entire amount
of the payroll and deposits
it in the payroll imprest
account.
The general ledger function
receives the labor distribution
summary from cost accounting,
the disbursement voucher from
AP, and the journal voucher
from cash disbursements.
The general ledger department DR CR
Cash- Payroll Imprest Account XXX
makes a journal entry to Cash- Operating Account XXX
transfer the cash from the
operating bank account to the
payroll imprest account:
Time
consuming
High
possibility of
human error

Less costly
No danger
of losing
data in a
computer
 Transaction Segregation Your
Accounting Access Independent
Supervision
Authorization of Duties RecordsText Controls Verification
Here

Segregating key Supervisors control over

Only the time aspects of the
Verification of
should observe Audit access to all time,
cards of current payroll transaction the time-keeping
between AP and trail for journals, Paymaster,
and valid process and
cash disbursement
reconcile the time
payroll ledgers, and Accounts
employees are functions returns payable,
processed control to the
cards with actual source
attendance. General ledger
process documents
 Check independent contractors
and vendor status
Evaluate your relationship with your
independent contractor to be sure
they’re still operating under the
Verify Pay Rate correct classification.
Typos happens, so double check that Validate bank reconciliation
an extra 0 didn’t get added or left off
for the payroll account
of a payment. Pay rates change.
Employees get promotions, raises, Be sure the balances align and all
and bonuses. checks cleared for the amount they
Compare pay rates to time were issued.
and attendance record
Review payroll tax submissions
Check overtime hours, sick days,
and vacation time. Reconcile the expenses involved with
payroll taxes by comparing your tax
remittance reports against your own
payroll system reports.
 It is comprised of a set of software
programs which can automate almost all the steps
of the payroll process and requires only minimal
human intervention.
 Payroll is well-suited to
batch processing and
sequential files.

Most employees on the

Computer-based master file receive
Payroll System paychecks periodically.

The computer program performs

the detailed record-keeping, check-
writing, and general ledger
functions.
 Types of Payroll Software
01 Integrated payroll Dedicated payroll 02
management management

These are standalone apps that

Integrated payroll
go beyond core features with
management covers core specialized functions as time-
tasks like payroll processing, tracking and attendance,
income tax calculations, and customized reporting, benefits
paycheck printing. administration, and even a tax
planner.
Examples of Payroll Software
1. GUSTO 4. XERO

2. BAMBOOHR
5. WAVE

3.ONPAY 6. ULTIPRO
 GUSTO

• Gusto is a standalone payroll

software built for the small
business owner.
• The solution comes with benefits
and HR functions like employee
onboarding, time-off tracking, and
document management.
 BambooHR
• It caters to small and medium companies.
• It has a flexible core system and pricing
model packaged with custom features,
which allow users to set fields, tables, and
tabs, create user groups and integrate with
related systems like applicant tracking and
payroll.
 OnPay

• It can calculate federal and state payroll

taxes, make tax payments, and file tax
forms correctly.
• It also securely stores pertinent
information, manages payrolls quickly, and
automates certain tasks and operations.
 Xero
• It is an accounting-integrated payroll
management designed for small business
that need to integrate payroll with online
accounting.
• It could be a BambooHR alternative that
includes pension and finance
management, as well as core accounting,
inventory, bank reconciliation, and
purchase orders.
 Wave

• It is a free small business online

accounting with professionally designed
invoices, estimates, and receipts.
• The solution offers credit card payments,
income, and expense tracking and
deposit and pay stub payroll.
 UltiPro
• An alternative for Wave.
• It is an HCM-integrated payroll
management with payroll administration,
tax management, and compliant features.
• It involves technologies like artificial
intelligence and machine learning to
personalize system activities.
 Advantages of Payroll Software

01 Work out payroll calculations

and deductions quicker
Generate accurate
02 payslips

Calculate bonuses,
03 expenses, holiday pay, etc
with minimum effort Automate certain tasks,
04 such as year-end
reporting
 Store data such as payslips and
05 annual reports in a secure,
easily accessible system
Remove the need to
06 understand complex
tax legislation

Reduce the burden of

07 compliance
Disadvantages
of Payroll
01
Software
data security, loss or theft

02 cyber security and fraud

03 information access, quality and control

 Reengineered HRM Systems
Payroll can be reengineered as a part of human
resource management (HRM).

IT can process a wide range of personnel-

related data, including:

1. Employee benefits
2. Labor resource planning
3. Employee skills and training
4. Pay rates, deductions, and pay
checks
5. Evaluations
 Key Features of Reengineered HRM

Time-Keeping Personnel
It enters the attendance file
It can make changes to the
daily.
employee file in real time.

Cost
Data
Accounting
It enters job cost data either
It still uses batch processing and
daily or in real time. Processing
prepares all reports, the checks
and updates and general ledger
What makes reengineered HRM
systems differ from automated
manual and batch sequential file
system?
Operations depts. transmit transactions
to data processing via terminals
Direct access files are used for storage
Many processes are performed real
time
Real-time access to personnel files
required for direct inquiries
 THE

CONCEPTUAL
FIXED ASSET
SYSTEM
.
What is
Fixed assets are the

FIXED property, plant,

equipment used in the
and

operation of a business.

ASSET?
These are relatively
permanent items that
often collectively
represent the largest
financial investment by
the organization.
Specific objectives of the fixed asset system

Process the acquisition of fixed assets as needed in accordance with

formal management approval and procedures.

Maintain adequate accounting records of asset acquisition, cost,

depreciation, and physical location in the organization

Maintain accurate depreciation records for depreciable assets in

accordance with acceptable methods

Provide management with information to help plan for future fixed

assets investments

Properly record the retirement and disposal of fixed assets

Difference Between Expenditure Cycle and Fixed Asset System

Expenditure cycle
processes routine acquisitions
of raw material and finished
Fixed Asset System goods inventories.
processes nonroutine
transactions for a wider group of
users in the organization Expenditure Cycle
treat inventory acquisitions as
Fixed Asset System
an expense of the current period

capitalize fixed assets that yield

benefits for multiple periods
THE LOGIC OF A FIXED ASSET SYSTEM
 Three
Categories
Asset Acquisition
of Task
Asset Maintenance

Asset Disposal
 Three
Categories
Asset Acquisition
of Task
Asset Maintenance

Asset Disposal
Computer-Based Fixed Asset System

Demonstrates
real-time
processing
Illustration of Computer-Based Fixed Asset System
 The illustration above shows three
procedures:

1. Asset acquisition procedure

2. Asset maintenance and
3. Disposal procedure.
What is
It automatically updates
FIXED ASSET the fixed asset control
account in the general
SYSTEM? ledger and prepares
journal vouchers for the
general ledger
department as evidence
of the entry
What is

FIXED ASSET
SYSTEM? It also produces
reports for
accounting
management.
 Two Important Documents

FIXED ASSET DEPRECIATION FIXED ASSET REPORT

REPORT
 Controlling the Fixed Asset System

01 Authorization
Controls

Independent
03
Verification Controls

02
Supervision
Controls

Three areas of principal difference between fixed asset system and expenditure cycle
THANK YOU