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Unit 5 Payroll & HR function, Objective, Recommendation - Coggle…
Unit 5 Payroll & HR function
The human resources (HR) function
all matters relating to the personnel department are properly maintained
all aspects of the human capital of the company
responsible for
keeping all employee records
focus on the hiring and dismissal of staff
ensuring that pay rates and changes thereto are implemented promptly
Journal entries
processed month-end
DR. Salaries and wages
CR. Bank (Payables)
Raised liability
DR. Employee Tax / medical aid / pension fund
CR. Taxes to revenue service / Discovery Health
Payment made
DR. Taxes to revenue service / Discovery Health
CR. Bank
Documentation
Employee’s file
Payroll amendment forms;
Updated list of employee details.
Controls
Interviews conducted with applicants and head of dep
All appointments and dismissals/resignations should be authorised by senior management
All changes should be decided upon by the human resource department after consultation with all interested parties (e.g. unions) and consideration of relevant laws and regulations
All changes should be documented and approved by the authorising body
Amendments should
be recorded on sequentially pre-numbered payroll amendment forms and supported by further documentation
documents should also be authorised and signed by senior management.
should be maintained in each employee file
The timekeeping function
Objective
to keep an accurate and complete record of valid hours worked for which the company must remunerate employees
to ensure that all employees are paid for only the hours that they worked
employee to pass a clock card or swipe through a time clocking device which will automatically record the time of either entry or exit
Documentation
Blank clock cards;
Hours recorded on clock;
Batch control sheet and batch register
Controls
Clock cards
be numerically accounted for (sequence check);
be issued by the personnel department and prepared from personnel records/master file
be stored at clock machine, under supervision, not with the employees).
Entry and exit points to the work area should
be limited to one access point;
protected by a “turn style” type mechanism;
be supervised during clocking periods.
Clock procedures
the clocking machine should be situated at the entrance/exit to ensure that personnel may not leave premises without clocking in/out
supervision over the clocking of employees (prevent employees from clocking
in for absentees).
The foreman should
keep a record of personnel present and time worked;
sign clock cards as evidence of approval of hours worked by the employee.
the foreman’s clock card should be approved by a senior official
Overtime should
be authorised according to the company policy by the factory manager or foreman
the foreman’s overtime is authorised by the factory manager.
The payroll preparation function
Objective
to calculate gross wages, deductions from employees and net wages
Documentation
Clock cards;
Updated list of employees;
Payroll (wage journal);
Week to week reconciliation.
Controls
hours recorded on the payroll should be obtained directly from the clock card or computer-transaction file
The wage rates, deductions should be obtained from personnel records or master files
The calculations and castings should be reviewed by an independent person
Before payments can be authorised, the senior personnel should inspect the payroll and the week to week reconciliations performed
All personnel should sign payroll as proof of functions performed.
The payment preparation and pay-out function
objective
to ensure that employees are paid their wages for only the hours which they have worked
Documentation
Authorised payroll;
hould be signed by two signatories, one of whom must be
senior management
Payroll
should be done by personnel not involved with the compilation of wages;
The foreman must identify all employees, however, the pay-out must not be done by himself
the employees should sign payroll as proof of receipt;
the foreman should sign payroll after pay-out as proof of supervision and identification of employees.
Payslips
Pay-packets
should be cashed at the bank
Unclaimed wages register.
should be retained by the paymaster who should
lock them away
Contr
Payment preparation and pay-out and deductions: payments and recordings
Objective
to hold back certain portions of the wages earned, due to statutory requirements, such as Employee Tax
to ensure that these amounts owed to the relevant authorities are correct, paid over within the required period, and are supported by the relevant supporting documentation or return
Documentation
General ledger;
Payroll (wage journal)
Cash payments journal
Return form.
Controls
Appointing risk compliance officers
Risk management policies
Internal controls
Validity and Authorisation
All recorded wages are valid and supported by proper documentation
Completeness
All valid payroll transactions are recorded and nothing is left out
Accuracy
Payroll transaction are shown at the correct amounts
Recording
All purchase transactions are correctly recorded
Cut off
All payroll transactions are recorded in the correct reporting period
Weakness example
Unclaimed wages kept at owners home
unclaimed wages and payroll should be retained by the paymaster who should
lock them away
Objective
Recommendation