Chapter 14

The Human Resources (HR)

Management and Payroll
Processes
Accounting Information Systems 8e
Ulric J. Gelinas and Richard Dull

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Learning Objectives
Define and understand the basic functions of the HR management
and payroll processes.
Describe the relationship between the HR management and payroll
processes and their environment.
Comprehend the relationship between the HR management and
payroll processes and management decision making.
Depict the logical and physical elements of the HR management
and payroll processes.
Describe some of the technology used to implement the HR
management and payroll processes.
Prepare a control matrix for a typical payroll process, including
explanation of how business process control plans can accomplish
payroll operations and information control goals.
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Process Definition and Functions

The human resources management (HRM) process consists of people,

equipment, activities, and controls that supports:
repetitive work routines of the HR department.
decision needs of those who manage the HR department.

The HRM process

captures, records, and stores data concerning HR activities.
generates a variety of HR forms and documents.
prepares management and governmental reports.

The payroll process consists of people, equipment, activities, and

controls that
support the repetitive work routines of the payroll department.
maintain records containing data for payroll taxes and fringe
benefits, attendance reporting, timekeeping, and paying employees.
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Human Resources Options in

Microsoft Dynamics GP

Organization Chart of the HR

Function

Duties of
HR
Managers

Duties of
HR
Managers
(contd.)

Integration of the HRM and

Payroll Processes

Payroll function often automated due to its repetitive, labor intensive

nature.

Current HR software can do much more than just payroll.

Because the HR management and payroll processes share so much

employee data, the functions must be integrated into an enterprise
system.

The HR module includes many options for managing employees,

including
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

HR manuals
Helpful hints
Retirement information
Personal profile
Forms and changes
Important links

Outsourcing of payroll and other HR functions

Enterprise systems play a role in implementing
required HR and payroll functionality.
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Options for Maintaining Employee

Master Data in Microsoft Dynamics GP

10

HRM Process - Systems Flowchart

11

Implementing the HRM Process

Process Inputs: In general, the HR forms
in the systems flowchart 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

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 automatically
started by the system.
The candidate selected and hired can come
from within or outside of the organization.
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Implementing the HRM Process

Evaluating employees involves many

activities.
Departmental managers and supervisors
(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 changes.
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Implementing the HRM Process

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 employees status from current
employee to terminated employee.
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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 including
Internal communications
Payroll reports
Reports for governments (i.e. OSHA)
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Organization Chart Illustrating

the Payroll Function

17

Payroll
Process
Context
Diagram

18

Payroll Process: Level 0 DFD

19

Payroll Process Diagram 4

20

Payroll Accounting Entries

21

Accounting Entries (Contd.)

22

Payroll Process Flowchart

23

Payroll Fraud
Types of payroll frauds:
Ghost employees (former or non-existent
employees who are issued paychecks).
Falsified hours and salary (overstated hours
worked or base salary amount).
Commission schemes (overstated sales or
commission rates).
False workers comp claims (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 are done through the
payroll system. Fraudulent activities
include:
Claiming personal expenses as business
Altering receipts to increase expenses
Submitting false receipts
Submitting the same expense multiple times
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Payroll
Process
Control
Matrix

27

Payroll Process Control Matrix

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