Matakuliah
Tahun
: F0642 / Perancangan Sistem Akuntansi
: 2009
The Human Resources Management and
Payroll Processes
Pertemuan 10 - 11
Synopsis
• 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
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Synopsis
• 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:
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graying workforce
virtual teams
telecommuters
consultants
contractors
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
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Process Definition and Functions
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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 jobrelated knowledge, skills, attitude, and motivations
2. Human assets include full-time permanent employees, plus parttime 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. A person’s relationship with an organization, from hiring through
termination, must be nurtured and managed to obtain maximum
lifetime value
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Definition of HR Management Process
• 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
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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
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Figure 14.1 on page 512
• 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:
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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
Technology Trends and Developments
• 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:
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Financial Accounting
Logistics
Sales and Distribution
The Workflow Module
Implementing the HRM Process
• 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
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Implementing the HRM Process
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Selecting employees may be initiated in one of two
ways:
1. Departmental managers (outside the HR department) may
initiate the process to satisfy their immediate hiring needs
2. Selection process may be started by the system automatically
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Implementing the HRM Process
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Evaluating employees comprises a multitude of
activities
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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
Implementing the HRM Process
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Terminating employees closes the employment
process loop
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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
Implementing the HRM Process
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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 laborforce 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
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HRM process prepares reports for government and nongovernment entities
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HR reports might include those provided to the following:
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• Unions
• Equal Employment Opportunity (EEO)
• Occupational Safety and Health Administration (OSHA)
• Department of Labor
There are also numerous communications to employees of HRrelated information
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Payroll reports: employee federal, state, and local taxes
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.
HR Management Flowchart
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Key Data Tables in the HR Process
• Though the flowchart shows only one data
store, multiple database tables are
contained:
– Employee/payroll master data
– Labor-force planning data
• Staffing requirements
• Skills required
• Turnover data
– Skills inventory data
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The Payroll Process
• Payroll generally
falls under the
controller’s office
with the treasurer
participating in
distributing
paychecks
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Payroll Process Flowchart
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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)
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Payroll System Controls
• 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
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Reimbursement Fraud
• Reimbursement for employee business
expenses often clear the payroll system
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Claiming personal expenses as business related
Altering receipts to increase expenses
Submitting false receipts
Submitting same expense multiple times
Payroll Process
Control Matrix
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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Payroll Process Control Matrix
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