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HUMAN RESOURCES

CYCLE

CONCEPTUAL PAYROLL SYSTEM
• Payroll processing is a special-case purchases system in which the
organization purchases labor rather than raw materials or goods for
resale.
• Purchasing and disbursement applies to all vendors and inventory
items. In Payroll, however, different procedures are done to pay
hourly workers, salaried workers, commissioned workers, etc. and
to have special accounting procedures for employee deductions,
withholding taxes and premium pays.

. These documents identify employees authorized to received a paycheck and are used to reflect changes in hourly pay rates. PERSONNEL DEPARTMENT • Prepares and submits personnel action forms to the prepare payroll function. payroll deductions and job classification.

Job Tickets – capture the time an individual spend on each production job.Time Cards – capture the time the employee is at work. 2. These are sent to the prepare payroll function for calculating the amount of the employee’s paycheck. PRODUCTION DEPARTMENT • Two types of time records: 1. This is used by the Cost Accounting department to allocate direct labor charges to work-in-process accounts. .

. the charges are summarized in a labor distribution summary and forwarded to the general ledger function. UPDATE THE WORK-IN- PROCESS ACCOUNTS •After the cost accounting allocates labor costs to the WIP accounts.

. 2. personnel action form and copy of the payroll register. Sends the paychecks to distribute paycheck function. 4. premium pays and net pay. PREPARE PAYROLL 1. deductions. Enters this information into the employee payroll records. Prepare the payroll register showing gross pay. Prepares employee paychecks. 5. Files the time cards. 3.

To prevent this. Employees are required to open an account in a certain bank and the companies will credit the employee’s account depending on the records found in the payroll register. DISTRIBUTE PAYCHECK/ BANK CREDITS • A form of payroll fraud involves submitting time cards for non- existent employees. . many companies takes advantage of the banking system.

The clerk records the voucher register and submits the voucher packet (voucher and payroll register) to cash disbursements. PREPARE ACCOUNTS PAYABLE • The accounts payable clerk reviews the payroll register for correctness and prepares copies of a cash disbursement voucher for the amount of the payroll. . A copy of the cash disbursements is sent to the general ledger function.

PREPARE CASH DISBURSEMENT • Upon receipt of the voucher packet . the cash disbursement function prepares a single check for the entire amount of the payroll and deposits it in the payroll Imprest account. This account is used only for payroll. The clerk sends a copy of the check along with the disbursement voucher and payroll register to the AP department. where they are filed. Funds must be transferred from the general cash account to this imprest account before paychecks can be cashed/ employee accounts be credited. . Finally. a journal voucher is prepared and sent to the general ledger function.

UPDATE GENERAL LEDGER • The voucher packer received. HMDF Payable . PHIC. From: Labor Distribution Summary Disbursement Voucher Work-in-Process (Direct Labor) Wages Payable Factory Overhead (Indirect Labor) Cash Wages Payable Withholding Tax Payable SSS. the clerk now prepares the journal entries.

Transaction Authorization 2. Independent Verification . Supervision 4. Segregation of Duties 3. Access Controls 6. PAYROLL CONTROLS 1. Accounting Records 5.

This document describes additions. . TRANSACTION AUTHORIZATION • Payroll keeps employee records current. and other changes to the employee file and acts as an important authorization control to ensure that only the time cards of current and valid employees are processed. deletions.

. Some of these are in contradiction with basic internal control objectives. • For purposes of operational efficiency. the payroll function performs several tasks. This opens the opportunity for the person to create a false liability to himself. the payroll function has both the asset custody (employee paychecks) and record- keeping responsibility (employee payroll records). Example. SEGREGATION OF DUTIES • The time-keeping function and the personnel function should be separated. approve payment and write the check. The personnel provides payroll with the pay rate information for authorized employees only.

use biometric devices to have security in the time checking of employees. SUPERVISION • Sometimes employees will clock in for another worker who is late or absent. . Supervisors should observe the time keeping process and reconcile the time cards with actual attendance. • Some companies.

which contains the employee records and various expenses (salary deductions). Time cards. Subsidiary ledger accounts. 4. Journal information. . and payroll imprest system. from labor distribution summary and the payroll register. ACCOUNTING RECORDS • The audit trail for payroll includes the following documents: 1. General ledger accounts: payroll control. 2. cash. 3. job tickets and disbursement vouchers.

as it is in all expenditure cycle systems . Control over access to documents is important. ACCESS CONTROLS • The assets associated with the payroll system are labor and cash. Both can be misappropriated through improper access to accounting records. A dishonest individual can misrepresent the number of hours worked on the time cards and thus embezzled cash.

INDEPENDENT VERIFICATION 1. the supervisor must verify their accuracy. Paymaster – the use of an independent paymaster to distribute checks helps verify the existence of employees. . 3. 4. 2. Verification of Time – before sending time cards to payroll. Accounts Payable – the AP clerk verifies the accuracy of the payroll register before creating a disbursement voucher that transfers funds to the imprest account. General Ledger – the GL department provides verification of the overall process by reconciling the labor distribution summary and the payroll disbursement voucher.

PREMIUM PAY • All employees required to work on holidays. the total pay is ₱114 per hour (₱57x200%). It is subject to taxation. such as special holidays and regular holidays. *The employee may not come to their work when it is a regular holiday. Example: An employee’s rate per hour is ₱57. . • Regular Holiday Premium Pay (200% of normal rate per hour) Employees who work during regular holidays (for work within 8 hours) are entitled to an additional 100% or effectively 200% of the normal rate. but they will also be paid the normal rate for one (1) day if the employee is present one ordinary day before the regular holiday or on leave on that day.

*The “No work. .• Special Holiday Premium Pay (130% of normal rate per hour) Employees who work during special holidays (for work within 8 hours) are entitled to an additional 30% or effectively 130% of the normal rate. No pay” policy applies for special holidays for DAILY- PAID employees only. Monthly-paid employees are entitle to 100% of daily rate.10 per hour (₱57x130%). the total pay is ₱74. Example: An employee’s rate per hour is ₱57.

such as rest day and special non-working days. . the total pay is ₱85. the total pay is ₱74.10 per hour (₱57x130%).50 per hour (₱57x150%). Example: An employee’s rate per hour is ₱57.• Non-working day Premium Pay (130% of normal rate per hour) All employees required to work during non-working days. • Rest day and at the same time a special holiday / non-working day (150% of normal rate per hour) Example: An employee’s rate per hour is ₱57.

Example: An employee’s rate per hour is ₱57. Overtime pay rates depend upon the days the work is performed. It is subject to taxation. then the overtime rate per hour is ₱71. . • Special Holiday Overtime (169% of normal rate per hour = 130% Special Holiday x 130% Overtime) Example: An employee’s rate per hour is ₱57. then the overtime rate per hour is ₱74. special holiday or regular holiday.10 (₱57 x 169%). the rate for the first 8 hours is 130% of the normal rate per hour. rest day. In excess of 8 hours.25 (₱57 x 125%) • Rest day Overtime (169% of normal rate per hour = 130% Rest day x 130% Overtime) On a rest day. whether it is ordinary working day. the overtime rate per hour is 130% of the of the adjusted rate per hour (130% Rest Day) Example: An employee’s rate per hour is ₱57. • Ordinary Working Day Overtime (125% overtime pay) On an ordinary day. then the overtime rate per hour is ₱74. OVERTIME PAY • All employees required to work beyond the normal 8 hours are entitled to overtime pay. the overtime rate per hour is 125% of the normal rate per hour.10 (₱57 x 169%).

66 (₱57 x 338%). . then the overtime rate per hour is ₱192. then the overtime rate per hour is ₱148.70 per hour (₱57x110%). • Regular Holiday and at the same time Rest Day Overtime (338% of normal rate per hour = 200% Regular Holiday x 130% Rest Day x 130% Overtime Pay) Example: An employee’s rate per hour is ₱57.m.m. Example: An employee’s rate per hour is ₱57. the total pay is ₱62.20 (₱57 x 260%). to 6 a. • Night Shift Differential or Graveyard Shift Pay (110% of normal rate per hour) – only for work between 10 p. It is subject to Taxation. then the overtime rate per hour is ₱111.15 (₱57 x 195%). • Regular Holiday Overtime (260% of normal rate per hour = 200% Regular holiday x 130% Overtime pay) Example: An employee’s rate per hour is ₱57.• Rest day and at the same time Special Non-working day Overtime (195% of normal rate of return = 150% Rest and Special non-working day x 130% Overtime pay) Example: An employee’s rate per hour is ₱57.

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PHIC HDMF. Shoe El Doo Company PAYSLIP Employee Name: ______________________ Pay Period: ____________________ ID Number: __________________________ Pay Cycle: ____________________ Earnings Amount Deductions Amount Basic Salary ₱ SSS Contribution ₱ Premium Pay PHIC Contribution Overtime Pay HDMF (Pag-IBIG) Contribution Withholding Taxes Gross Earnings ₱ Total Deductions ₱ Net Earnings: ₱____________ .PAY SLIP – A DOCUMENT INCLUDED IN THE SALARY/WAGES PAID THAT RECORDS HOW MUCH MONEY IS EARNED AND HOW MUCH IS DEDUCTED FOR MANDATORY DEDUCTIONS (SUCH AS SSS. UNION DUES) AND WITHHOLDING TAXES.

Lunch break is 12:00 – 1:00 pm.SEATWORK # 2 • Work starts at 8:00 a. . and Mr. overtime is computed in excess of 8 hours. Apple Alfa is paid P 60 per hour. . Cat Charlie is paid P 80 per hour.m. early time in will be considered as 8:00 a. Boy Bravo is paid P 70 per hour.m. Work for each day is 8 hours. which is NOT paid. • Prepare a payroll computation. with premium and overtime pay features. Mr. The attendance of 3 employees are as follows: • Ms.