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The payroll cycle (5 distinct functions) - Coggle Diagram
The payroll cycle
(5 distinct functions)
1.)
The Human Resource(HR)
function
3 documents:
employee's file, payroll amendment form and updated list of employee details.
Objective
= "ensure that all matters relating to the personnel department are properly maintained."
2.)
The timekeeping
function
3 documents:
blank clock cards, hours recorded on clock and batch control sheet and batch register.
Objective
= "keep an accurate and complete record of valid hours worked for which the company must remunerate employees"
3.)
The payroll preparation
function
4 documents:
clock cards, updated list of employees, payroll(wage journal) and week to week reconciliation
Objective
= "to calculate gross wages, deductions from employees (which must be paid over to the relevant authorities) and net wages."
4.)
The payment preparation and pay out
function
5 documents:
authorised payroll, payroll, payslips, pay-packets and unclaimed wage register
Objective
= "ensure that employees are paid their wages for only the hours which they have worked."
5.)
The deductions: payments and recording
function
4 documents:
general ledger, payroll(wage journal), cash payments journal and return form
Objective
= "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." This refers to portions of wages that should be paid to the different authorities due to statutory requirements.
Other important information
Internal controls
= validity & authorisation, completeness, accuracy, recording and cut-off
Substantive procedures(auditing)
= general and detail testing. Detail testing = validity/occurrence and completeness
Weaknesses and risks