Unit 12 -- Payroll
October 7, 2015
Far More Danger
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Disbursing money to employees
Relatively few external checks and balances
Employees feel entitled
Employees are friends with each other
Employees are familiar with the procedures
Payroll Cycle
• Far more diversity between companies
– Different documents
– Different job titles
– Different reporting paths
– Different information flows
President
VP
Operations
VP
Personnel
Controller
President
Treasurer
Production
Manager
VP Operations
Director
HR
Controller
Sales
Manager
President
Treasurer
Production
Manager
VP Operations
Personnel
Manager
Controller
Sales
Manager
President
Treasurer
Production
Manager
Controller
Personnel
Manager
VP
Operations
Sales
Manager
Functional
Supervisor
Functional
Manager
Determines
Need
Human
Resources
Executive
Management
Budget,
Strategic Plan,
Etc.
Functional
Supervisor
Human
Resources
Advertise Position,
Manage Applicants
Set up Interviews
Candidate
Resume
Application
Etc.
Interview
Selects
Candidate
Offer or
Contract
Candidate
Functional
Supervisor
Human
Resources
New
Employee
Registration
Employee
Master
File
I-9
W-4
Benefits
Enrollment
Functional
Supervisor
Employee
Payroll
Time
Sheet
Enters
Data
Clock
Card
Hours
Data
Functional
Supervisor
Employee
Payroll
Enters
Data
Production
System
Hours
Data
Functional
Supervisor
Payroll
Human
Resources
Production
System
Time
Sheet
Hours
Data
Payroll
Run
Employee
Master
File
President
VP
Operations
Controller
VP Personnel
Functional
Supervisor
Payroll
Human
Resources
Prodn
System
Payroll
Time
Sheet
Hours
Data
Employee
Master
File
Payroll
Run
Payroll
Budget
Functional
Manager
Payroll
Report
Pay Stub
Payroll
Report
Payroll
Report
Treasurer
Controller
Employee
Form 941
Emp. Bank
Pay Check
Withholding
Deposit
IRS
Prodn
System
Payroll
Time
Sheet
Hours
Data
Employee
Master
File
Payroll
Run
Payroll
Budget
Functional
Manager
Payroll
Report
Pay Stub
Payroll
Report
Payroll
Report
Treasurer
Controller
Employee
Form 941
Emp. Bank
Pay Check
Withholding
Deposit
IRS
Prodn
System
Payroll
Time
Sheet
Hours
Data
Employee
Master
File
Payroll
Run
Payroll
Budget
Functional
Manager
Payroll
Report
Pay Stub
Payroll
Disbursement File
Payroll
Report
Treasurer
Controller
Employee
Emp. Bank
Withholding Deposit
and Form 941
Net Pay
IRS
Controller
Payroll
Report
Deposit
Receipt
Bank
Statement
Bank
Reconciliation
End of Year
(after Dec 31 but
before January 31)
Payroll
Payroll
Records
Employee
W2
W-2
W2
Transmit
IRS
Questions?
Questions about a “batch-based” system?
Transaction Cycles
• Purchasing Cycle
• Revenue Cycle
• Payroll Cycle
Capital Asset Cycle
Capital Asset Cycle
Capital Asset Cycle
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Identification of Need
Justification (ROI)
Authorization of Procurement
Purchase or Construction
Installation, Set-Up,
Capitalization
Depreciation
Disposal
Investing Cycle
Capital Asset Life Cycle
Financing Cycle
Financing Cycle
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Identification of Need for Money
Justification (ROI)
Decision of which way to raise the money (Equity vs LTL)
Issuance of Stocks or Bonds, or loan arrangement
“Closing” or IPO or other
Compliance with Covenants and Restrictions
Calculation/Payment of Interest, or Dividends
Retirement of Debt
Capital Acquisition Cycle
Research and Development Cycle
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Identification of the need
Basic Research vs. Applied Research
Procurement of Resources Necessary
Application of Resources, Tracking, Analysis
Patents, Copyrights, Trademarks, etc. (Intellectual Property)
Determination of Accounting Treatment
Amortization
Manufacturing Cycle
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Design and Engineering
Raw Materials Delivery, Logistics, Storage, Usage
Scheduling
Actual Conversion Activities
Labor
Overhead Application and Costing, ABC
Movement of Costs to Finished Goods
Conversion Cycle
Accounting Cycle
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Open the period
Reversing Entries from prior period’s accruals/deferrals
Transaction recording
Trial Balance
Adjusting Entries (accruals/deferrals)
Financial Statement Preparation
Closing Entries
Transaction Cycles
• Purchasing Cycle
• Revenue Cycle
• Payroll Cycle
• Investing Cycle (Capital Asset Cycle)
• Financing Cycle
• R&D Cycle
• Manufacturing Cycle (*)
* -- Not a true TRANSACTION cycle, but often considered one
Schedule
• Today Oct 12:
• Wed Oct 14:
• Friday Oct 16:
Payroll and Minor Transaction Cycles
Units 13, 14, 15
Group Work Day for E-E Distributors
• Monday Oct 19:
• Wed Oct 21:
• Friday Oct 23:
Unit 15 (conclude) and 16
Unit 17 and 18
Unit 18 (conclude) and help session
• Monday Oct 26:
Exam 2