Matakuliah Tahun : F0204 / Sistem Akuntansi : 2007

• Human capital management (HCM), the process of managing how people are hired, developed, assigned, motivated and retained, presumes that employees reflect a strategic investment, rather than an administrative cost • Some estimates place the value of human capital between $500,000 and $5 million per person • Costs of such human capital, including compensation, benefits, and HR, represent 43 percent of the average corporation’s total operating expense Bina Nusantara

• The automation of HR (dubbed “e-HR”) may transform HR from a cost center to a highly valued, strategic, mission-critical part of the business • HR automation will affect evaluation and compensation programs to reflect the changing work patterns, including: – graying workforce – virtual teams – telecommuters – consultants – contractors Bina Nusantara – part-time and temporary employees

Synopsis In this chapter we explore three themes: 1. First, we briefly examine the importance of people to the success of any organization 2. Next, we describe how the HR management and payroll processes assist management in leveraging its human capital 3. Finally, we introduce some of the technology used to implement modern HR management and payroll processes Bina Nusantara

Process Definition and Functions • Personnel management started by handling payroll and personnel administration, but evolved by adding functions to handle recruiting, employee relations, and so on.
• HRM still viewed personnel as something that could be controlled • HCM philosophy is based on three major principles: 1.
An individual’s value to an organization is derived from his/her job related knowledge, skills, attitude, and motivations 2. Human assets include full-time permanent employees, plus part time employees, temporary employees, and independent contractors.
• With supply chain management, an organization’s human assets could include employees of suppliers, sales channel partners, and customers 3.
Bina Nusantara A person’s relationship with an organization, from hiring through termination, must be nurtured and managed to obtain maximum lifetime value

• Primary function of the HRM process is to create information flows that support the following: 1. Repetitive work routines of the HR department 2. Decision needs of those who manage the HR department • The HRM process supports the work routines of the HR department and provides information for management decisions by: – Capturing, recording, and storing data concerning HR activities – Generating a variety of HR forms and documents – Preparing management reports – Preparing governmental reports Bina Nusantara

The Payroll Process • Many companies often merge payroll and HR • The payroll process maintains records of payroll taxes, fringe benefits, attendance/absence, time worked and employee paychecks • The payroll process is generally automated because computers are much faster at handling the repetitive computations necessary (payroll is also the most frequently outsourced application in accounting) • Current HR software reaches far beyond simply doing payroll and includes: – Benefits admin, applicant tracking/processing, skills inventories and compliance reporting • Much of HRM is NOT captured by GAAP – But accountants must recognize the immense value of human capital and its affect on the long-term financial health of the organization Bina Nusantara

• The HR module includes options for both HR and payroll, among others • The advantages gained by allowing the two processes to share common data include: – Creating a single source for obtaining HR information – Providing for faster data access – Minimizing data redundancy – Ensuring data integrity and consistency – Facilitating data maintenance – Improving data accuracy Bina Nusantara

Bina Nusantara Organization Chart of the HR Function

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• HR self service systems • Organizations might outsource other functions to support HR management processes.
– Web-based collaboration – Payroll • Enterprise systems play a major role in implementing required HR and payroll functionality.
• Implementing the HRM process with an enterprise system can help recognize the benefits of integration of the HR management process with other enterprise systems modules such as: – Financial Accounting – Logistics – Sales and Distribution – The Workflow Module Bina Nusantara

• Process Inputs: In general, the HR forms in the figure capture information about three HR-related events: • (1) selecting employees • (2) evaluating employees, and • (3) terminating employees Bina Nusantara

• Selecting employees may be initiated in one of two ways: 1.
2.
Departmental managers (outside the HR department) may initiate the process to satisfy their immediate hiring needs Selection process may be started by the system automatically Bina Nusantara

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– Evaluating employees comprises a multitude of activities Departmental managers and supervisors (again, outside the HR function) usually initiate evaluations or other changes affecting employees – The manager of personnel appraisal and development (in HR) typically approves the review and implements such changes Bina Nusantara

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– Terminating employees closes the employment process loop Periodically, departmental managers and supervisors (in concert with HR managers) must make difficult decisions about the retention of employees – If a termination is necessary, the employee change screen is used to initiate the process of changing an employee’s status from current employee to terminated employee Bina Nusantara

Implementing the HRM Process • • • • •
Processing Logic and Process Outputs.
HR requests initiated outside of the HR department are approved within that department and then routed to HR for approval Some data may be entered within HR The employee/payroll master data, skills inventory data, and labor force planning data within the enterprise database are updated and various reports are made available – Several outputs are produced New hire: • • An employment letter is sent to the employee Selection notice is sent to the department manager – • Feedback on job performance: Employee review form – • • Termination: Employees are notified of a dismissal through a dismissal letter Termination notice sent to the operating department manager.
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Implementing the HRM Process • • – HRM process prepares reports for government and non government entities Payroll reports: employee federal, state, and local taxes – – – – HR reports might include those provided to the following: • Unions • Equal Employment Opportunity (EEO) • Occupational Safety and Health Administration (OSHA) • Department of Labor • • Bina Nusantara – – – – – There are also numerous communications to employees of HR related information Job opening announcements Training information Phone books Benefits literature Policy and procedure manuals, and the like. Many companies have found that such materials can be disseminated effectively and efficiently through an HR portal, which serves as a central data source for such information.

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– Employee/payroll master data – Labor-force planning data • Staffing requirements • Skills required • Turnover data – Skills inventory data Bina Nusantara

• Payroll generally falls under the controller’s office with the treasurer participating in distributing paychecks
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Bina Nusantara Accounting Entries in Payroll Process

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Payroll Has High Fraud Potential • Types of payroll frauds: – Ghost employees (employees who don’t exist but are issued paychecks) – Falsified hours (employees who overstate hours worked) – Commission schemes (collecting commissions on false sales or using false commission rate) – Worker’s comp schemes (faking injury to receive compensation) Bina Nusantara

• Segregation of duties between HR (employee record creation), payroll (prepares payroll) and AP/cashier (disburses cash) • Direct deposit (eliminates opportunity for check fraud) • Review of employee master data for duplicate names and/or social security numbers • Comparison of actual payroll to budget Bina Nusantara

• Reimbursement for employee business expenses often clear the payroll system – Claiming personal expenses as business related – Altering receipts to increase expenses – Submitting false receipts – Submitting same expense multiple times Bina Nusantara

Legend:
A = Provide employees with timely paychecks. B = Provide timely filing of tax returns and other reports to government agencies. C = Comply with requirements of payroll and tax laws and regulations.
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