RDEX FOOD INTERNATIONAL PHILS., INC.

MEMBER OF RD GROUP OF COMPANIES

INTERNAL AUDIT DEPARTMENT
RD Wharf 2, Puting Bato, Calumpang
9500 General Santos City
Land/trunk lines: (083) 552-25-41; 552-7631; 553-2846
Fax No. (083) 554-3178
Local Nos. 311, 170

To : Glenn B. Biaco and Roger E. Rivera

From : Internal Audit Department
Subjec : Mustard Seed Parallel Run (2nd validation)
t
Date : June 25, 2020

Below are the results of the 2nd parallel run between Mustard Seed and HRIS regarding payroll system:

Our aim is that the proposed system (Mustard Seed) must conform in what we are currently using (HRIS) and
should expect a greater benefit from it.

HRIS as a benchmark should be the basis of payroll recording and conformance of Mustard Seed on its results
must at least be the same.
Findings Recommendations / Comments
1) Basic Pay Identify the cause of the difference.

This maybe through error in encoding or difference in rates and

formulas used.

The Basic Pay is computed as:

Computation:
Mustard Seed HRIS
Rate ÷ 2 = Basic Pay* [(Rate ÷ 2) – LWOP – Late –
Under time] = Basic Pay*
2) Allowance This is due to some allowances recognized in Mustard Seed that are
not recognized in HRIS.
 Since this is termed as “Allowance”, this is of Temporary in nature.
This should be reviewed regularly if such person is still entitled to it
or better if this should have a period covered until when does the
allowance be given.
3) Overtime Identify the cause of the difference.

This maybe through the computation used by Mustard Seed over that
is used by HRIS.
4) Gross Pay This is due to the computations used.
Computation:
Mustard Seed HRIS
Gross Pay = [(*Basic Pay + Gross Pay = [(*Basic Pay +
Allowance + Over Time) +/- Allowance + Over Time) +/-
( Adjustments 1,2,3) – LWOP – Salary Difference]
Late – Under time ]
5) Tax Withheld This is due to the computations used.

Mustard Seed uses “Basic Pay” as Taxable Income while HRIS uses
“Gross Pay”.

Computation:
Mustard Seed HRIS
*Basic Pay – Statutory Benefits *Gross Pay – Statutory
= Bi-Monthly Taxable Income Benefits = Bi-Monthly Taxable
or Compensation Level Income or Compensation Level

(Bi-Monthly Taxable Income x (Bi-Monthly Taxable Income x

2) x 12 = Annual Taxable 2) x 12 = Annual Taxable
Income Income

Annual Taxable Income – Annual Taxable Income –

Prescribed Minimum = Excess Prescribed Minimum = Excess
over Prescribed Minimum over Prescribed Minimum

Excess over Prescribed Excess over Prescribed

Minimum x Applicable Rate = Minimum x Applicable Rate =
Annual Income Tax Annual Income Tax

(Annual Income Tax / 12) / 2 = (Annual Income Tax / 12) / 2 =

6) Statutory Obligations / Benefits
(SSS, PhilHealth, Pag-ibig)
7) Deductions
8) Net Pay
Bi-Monthly Withholding Tax Bi-Monthly Withholding Tax
There are Employees that are not deducted by Pag-ibig Contribution.
Mustard Seed does not have a description as to the components of
Other Deductions Ledger. It would be better that deductions should
be broke-down for us to easily trace and track the deductions made.
The difference most is due to Deductions.

Mustard Seed does not have the proper deductions as what HRIS had.

If Mustard Seed is implemented, a difference of P 315,364.07 will be

given erroneously to the Employees.
Overall Assessment:

Base on the Second Validation, still we can’t make Mustard Seed operate since the errors traced are immaterial
and cannot be accepted in a tolerable level.

Errors on “Net Pay” must be at least below 5% for the Mustard Seed to operate.

Assessed by:

Rowilson Rey B. Noval

Recommendations:

Glenn B. Biaco

Roger E. Rivera