Topic 3 – Accounting cycles

Study Unit 11: Payroll and personnel cycle  – page 84

 

Payroll is one of the most important processes from an employee’s perspective, because it ensures that he or she is paid every month. The timely and accurate processing of payroll is therefore crucial.

 

2 Personnel – page  85

 

A HRM System

 

– Personnel information systems are also referred to as?

Personnel information systems, referred to as human resource management (HRM) systems, is a specialised information system used for the management of personnel and the recording of their activities.

 

3 Payroll  – page 86

 

A payroll system

All employees’ payroll-related information is captured and processed on the payroll software.

The payroll will calculate the net pay due to each employee and the liabilities due to various parties such as pension funds, UIF, SDL and tax.

Payroll costing reports will include the payroll cost that needs to be allocated to each department and/or cost centre, and all liabilities that must be recorded .

In a non-integrated system, these costing reports are used to record the payroll transactions in the AIS.

 

– What are the major functions in a payroll system?

Keeping up to date the details of –

• Personal information: employee’s full name, surname, id number, address, next of kin, race, gender, income tax number
• Recruitment: job descriptions, vacancies, offers made
• Employee compensation: salary scales, structures, market salaries
• Performance management: key performance indicators, performance contract and reviews, promotions, disciplinary actions
• Talent management: employee education, training received and required, awards, work experience
• Absence management: vacation leave, sick leave, unpaid leave

 

– What major information is kept in a payroll system?

• The creation and distribution (print or electronic format) of IRP5 certificates
• Managing different types of contributions such as medical aid and provident and pension funds
• The management of different deduction types such as loan repayments and garnishee orders.

 

Reports and analytics

• Budget reports
• Timing before vacancies are filled
• Staff turnover
• Top performers & bottom performers
• Employment equity reports

 

– What accounting information system reports can we get from payroll for this activity?

• The payment cashbook detail report showing the cashbook payment transactions for a selected period
• The general ledger account details showing the accounting entries for the selected general ledger account

 

Where the HRM and payroll system are linked, the source documents will flow from the HRM system.

 

Source documents relating to the human resources management system will include

• Employment contracts stipulating salary
• Garnishee orders
• Tax directives received

 

Source documents relating to the physical payment of the payroll will include

• Eft reports
• Cheque stubs