i.Various Tax Reports and Forms – includes payroll tax reports for the federal and state governments, unemployment compensation reports, and W-2 / IRS 1099 forms completed at the end of each year.III.Major Functions in the HRM Process:a.Human Resources (HR)– responsible for managing the personnel needs of the organization including hiring, terminating, setting wage rates and salaries, and establishing and monitoring employee benefit programs. Also maintains employees’ personnel records.b.Supervision – responsible for reviewing and approving employees’ attendance andtime information, approving time sheets and job classifications, monitor productivity and labor cost variances.c.Timekeeping – prepares employees’ time information for payroll processing, responsible for coding payroll costs to appropriate accounts.d.Payroll Processing – responsible for computing gross pay, deductions and net pay.Responsible for recording and summarizing payments and verifying account distribution.i.This function may be outsourced to a third party such as ADP.e.Disbursement –responsible for paying employees for services and benefits including preparing and distributing payroll checks / direct deposits.f.General Ledger – responsible for properly accumulating, classifying, and summarizing payroll and benefit transactions in the general ledger.2
Chapters 12 – Auditing the Human Resource Management Processg.Key Segregation of Duties:i.The supervision function should be segregated from the human Resources (Specifically, personal records) and payroll processing functions.1.Danger: fictitious employees can appear on the payroll records or unauthorized payments can be made (unauthorized payments to existing employees or payments to fictitious employees).ii.The disbursement function should be segregated from the Human Resources (Specifically, personal records), supervision and payroll processing functions.1.Danger: unauthorized payroll checks can be issued if one person has the authority to hire employees, approve time reports, and prepare payroll checks.iii.The ______________________________________________ function should be segregated from the ___________________________ function.1.Danger: an individual can conceal fraud that would normally be detected by independent review of accounting entries made to the general ledger.IV.Test of Controls for Payroll Transactions:a.Assertions and Testing:i.Occurrence– All payroll transactions and events that have been recorded have occurred and pertain to the entity.
- Spring '13
- Human Resource Management, Expense, payroll journal