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UNIT 5 - PAYROLL FUNCTION, C T FRITZ 220164455 - Coggle Diagram
UNIT 5 - PAYROLL FUNCTION
The 5 functions of the Payroll function
Payroll Preparation Function
Documents required: 1. Clock cards; 2. Updated list of employees; 3. Payroll (wage journal); and 4. Week to week reconciliation.
Payments & 5. Recordings
Documents required for payment preparation and payout: 1. Authorised payrol; 2. Payroll; 3. Payslips; 4. Pay-packets; 5. Unclaimed wage register.
Documents required for payment and recordings: 1. General ledger; 2. Payroll (wage journal); 3. Cash payments journal; & 4. return form.
Timekeeping Function
Documents required: Blank clock cards; 2. hours recorded on clock and 3. Batch control sheet and batch register.
Human Resources Function
Documents required: 1. Employee's file; 2. Payroll amendment forms and 3. Updated list of employee details.
5 Control Objectives
Accuracy - Payroll transaction are shown at the correct amounts
Recording - All purchase transactions are correctly recorded
Completeness: All valid payroll transactions are recorded and nothing is left out.
Cut off - All payroll transactions are recorded in the correct reporting period.
Validation and authorisation - All recorded wages are valid and supported by proper documentation
Example: The employer has more than one place where employees can enter the workplace without using clock cards. The control that needs to be impletemented is that the employer must only have one access point and have numerical clock cards which is used in a clock card machine or else the employer risk paying more to employees than what was actually worked.
Internal controls
Accuracy - HR manager should review and authorise the payroll after it is checked that the payroll sum is the same as the drawn payment cheque for the employer and the cheque to authorities.
Recording - Hours recorded on clock card must be obtained directly from the clock machine report. Wage rates and deductions should be obtained from personnel records and master files. All calculations should be reviewed by an independent person and then sign as evidence of the review. Before payments are made senior personnel should inspect the the payroll and must this happen on a week to week basis. All personnel should sign the payroll as proof that functions have been executed.
Completeness - Each employee to collect their own payment packets and is no other employee allowed to collect on behalf of another. Sufficient segregation of duties must exist in the payroll cycle and must their be sufficient documentation to proof everything. Strict control for clocking in of employees, preparation of payroll and payments made
Cut off - Strict monthly schedule should be followed to post entries to raise any liabilities for the deductions. Ensure payments are made timorously. Supervisory checks to be made.
Validity and Authorisation - All wages, decuctions and payroll must be reviewed by a senior employee and signed as evidence of check. Complete records should be kept for every employee and just the foreman know each and every employee working for him.
C T FRITZ 220164455