CHAPTER 15THE HUMAN RESOURCES MANAGEMENT AND PAYROLL CYCLEIntroductionThehuman resources management (HRM)/payroll cycleis a recurring set ofbusiness activities and related data processing operations
associatedwith effectively managing employee workforce. The more important tasksinclude:1._recruiting and hiring2._training3._job
assignment4._compensation (payroll)5._performance evaluation6.Discharge of employees due to voluntary or involuntary terminationTasks 1 and 6 are performed once and tasks 2 through 5 are
performedrepeatedly.This chapter focuses primarily on the payroll system.OverviewThe HRM provides information on hirings, terminations, and pay-ratechanges due to pay raises and promotions.The various departments provide data
for_hours worked_.The government provides the_tax information and requirements_.The principal output for the payroll cycle is_a check_.Although direct labor
costs are a small portion of the totalmanufacturing costs, employees are a_key cost driver_ when it comes totheir performance which affects the quality of the products beingmanufactured.Some believe that the value of employees’ skills and knowledge
isseveral times greater than the value of a company’s_tangible assets_.However, accounting and the AIS have not traditionally measured orreported this value of the employees.The only value of the employee has been_the wage and
salary expense fordirect labor_, which is included in the work-in-process inventory.However, some companies made changes in the late 1990s to develop amethod to report on the intellectual assets and human resources. Forexample, Skandia Group experimented with including human
resourcesinformation in their annual report.1 1. Which of the following is not a task performed by the human resource management/payroll cycle?a. recruiting and hiring new employees b. trainingc. job assignment d. access right management d. access right management (Correct. This is not a task of the HRM/payroll cycle.) 2. Which of the following is not a
general threat to the HRM/payroll cycle?a. inaccurate employee master data b. unauthorized disclosure of sensitive information c. the loss or destruction of master data d. poor product design d. poor product design (Correct. This causes no threat to the HRM/payroll cycle.) 3. Which document lists the current amount and year-to-date totals of gross pay, deductions,and net pay for one employee?a. payroll register b. time card c. paycheck d. earnings statement d. earnings statement (Correct. The earnings statement attached to each paycheck provides 4. The HRM department is responsible for updating the payroll master database for internallyinitiated changes related to employment.a. True. b. False a. True. (Correct. Updating the payroll master database reflects various types of internallyinitiated changes: new hires, terminations, changes in pay rates, or changes in discretionary withholdings.) 5. Use of a payroll service bureau or a PEO provides which of the following benefits?a. fewer staff needed to process payroll b. lower cost of processing payroll c. less need for developing and maintaining payroll tax expertise d. all of the above d. all of the above (Correct.) 6. Many companies use a _________ to record daily arrival and departure times of employees,who are paid on an hourly basis.a. time card b. time sheet c. punch card d. entry card a. time card (Correct. A document that records the employee’s arrival and departure times 7. Which department should have responsibility for authorizing pay-rate changes?a. timekeeping b. payroll c. HRM d. accounting c. HRM (Correct. HRM has no other role in the payroll process.) 8. To maximize effectiveness of internal controls over payroll, which of the following personsshould be responsible for distributing employee paychecks?a. departmental secretary b. payroll clerk c. controller d. departmental supervisor a. departmental secretary (Correct. This person has no other payroll duties so cannot conceal 9. Where should unclaimed paychecks be returned?a. HRM department b. cashier c. payroll department d. absent employee’s supervisor b. cashier (Correct. This permits funds to be quickly redeposited.) 10. Which of the following is an important supporting document to authorize the transfer offunds to the payroll bank account?a. earnings statement b. time card c. payroll register d. W-2 form c. payroll register (Correct. This document summarizes the amount to be paid to eachemployee and is sent to the accounts payable department for use in preparing a disbursement voucher to authorize the transfer of funds to the payroll account.) What are the major activities performed in the HRM payroll cycle?The most important tasks performed in the HRM/payroll cycle are recruiting and hiring new employees; training; job assignment; compensation (payroll); performance evaluation; and discharge of employees (voluntarily or involuntarily).
Which department should have the responsibility for authorizing payroll rate changes?Which department should have responsibility for authorizing pay-rate changes? c. HRM (Correct. HRM has no other role in the payroll process.)
Which of the following performs both payroll processing services and HRM services?professional employer organization (PEO) - An organization that processes payroll and also provides human resource management services such as employee benefit design and administration.
Which type of payroll report lists the voluntary deductions for each employee?The payroll register is a report that lists each employee's gross pay, payroll deductions, and net pay for each pay period. The deduction register lists the voluntary deductions for each employee.
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Traditionally, accountants have been most involved with which portion of the hrm/payroll cycle?
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