Professional Documents
Culture Documents
AIS - Chapter06.pptx Version 1
AIS - Chapter06.pptx Version 1
The
Expenditure
Cycle Part II:
Payroll
Processing and
Fixed Asset
Procedures
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3
PAYROLL SYSTEM GENERAL TASKS
• Personnel Department
• Personnel action forms is a document identifying employees
authorized to receive a paycheck; the form is used to reflect
changes in pay rates, payroll deductions, and job classification.
• Production Department
• Job tickets are mechanisms to capture the time that individual
workers spend on each production job.
• Time cards are a tool to capture the time the employee is at
work.
• Update WIP Account
• A labor distribution summary is a summarization of labor
costs in work-in-process accounts.
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4
Data Flow Diagram of Payroll Procedures
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5
Personnel Action Form
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6
Job Ticket
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7
Time Card
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8
PAYROLL SYSTEM GENERAL TASKS
(continued)
• Prepare Payroll
• Employee payroll records is the system an employer uses to
calculate, track, and report employee pay.
• Paychecks are a bank check given as salary or wages.
• The payroll register is a document showing gross pay,
deductions, overtime pay, and net pay.
• Distribute Paycheck
• Prepare Accounts Payable
• Prepare Cash Disbursement
• The payroll imprest account is an account into which a single
check for the entire amount of the payroll is deposited.
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 9
Payroll Register
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10
Employee Payroll Record
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 11
Employee Paycheck
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12
UPDATE GENERAL LEDGER
• The general ledger function receives the labor distribution
summary from cost accounting, the disbursement voucher
from accounts payable, and the journal voucher from cash
disbursements.
• The debits and credits from these entries must be equal.
• When the equality has been verified, the clerk files the
voucher and labor distribution summary.
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13
The Physical Payroll System
• Review of the operational features and control issues
pertinent to a basic technology system.
• Features and controls of an integrated system that uses
advanced technologies.
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14
BASIC TECHNOLOGY PAYROLL SYSTEM
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16
ADVANCED TECHNOLOGY PAYROLL SYSTEM
(continued)
• Employee Timekeeping
• The time and attendance file is generated by employees
directly entering timekeeping data in real time.
• Biometric time clocks verify employees’ identities by using
fingerprint or hand-vein scan technology.
• Magnetic swipe ID cards work like a credit card. Each
employee is issued an ID card that has a magnetic strip
containing employee information. The employee swipes the
card through the time clock to record start and end time on the
job.
• Proximity cards are similar to swipe cards but don’t require
the user to slide the card through a reader.
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17
ADVANCED TECHNOLOGY PAYROLL SYSTEM
(continued)
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18
Basic Technology Payroll System
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 19
Basic Technology Payroll System
(continued)
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 20
Integrated Payroll and HRM System
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 21
PAYROLL SYSTEM RISKS AND INTERNAL
CONTROLS
• Risk of Inaccurately Recording Transactions
• Physical Controls
• ACCOUNTING RECORDS
• INDEPENDENT VERIFICATION
• IT Controls
• DATA INPUT EDITS
• ERROR MESSAGES
• FILE BACKUP
• AUTOMATED POSTING TO ACCOUNTS
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 22
PAYROLL SYSTEM RISKS AND INTERNAL
CONTROLS (continued)
• Risk of Misappropriation of Cash through Payroll Fraud
• Physical Controls
• TRANSACTION AUTHORIZATION
• SEGREGATION OF DUTIES
• SUPERVISION
• ACCESS CONTROL
• IT Controls
1. Limit tests to detect excessive hours reported per period.
2. Biometric scanners, swipe cards, and PINs reduce the risk of
payroll fraud by ensuring that individuals clocking into the system
are valid employees.
3. Automated tests to validate employee time cards against a valid
and up-to-date employee file.
4. Paycheck direct deposit options for employees.
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 23
PAYROLL SYSTEM RISKS AND INTERNAL
CONTROLS (continued)
• Risk of Unauthorized Access to Payroll Records and
Confidential Employee Data
• Payroll information is at risk to unauthorized access from
outsiders as well as employees of the organization.
• IT Controls
• PASSWORDS
• MULTILEVEL SECURITY
• Outsourcing the Payroll Function
• Advantages and Risks Associated with Payroll
Outsourcing
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 24
Summary of Payroll System Risks and Controls
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 25
The Conceptual Fixed Asset System
• Fixed assets are the property, plant, and equipment used
in the operation of a business.
• The specific objectives of the fixed asset system are to:
1. Process the acquisition of fixed assets as needed and in
accordance with formal management approval and
procedures.
2. Maintain adequate accounting records of asset acquisition,
cost, description, and physical location in the organization.
3. Maintain accurate depreciation records for depreciable assets
in accordance with acceptable methods.
4. Provide management with information to help plan for future
fixed asset investments.
5. Properly record the retirement and disposal of fixed assets.
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 26
THE LOGIC OF A FIXED ASSET SYSTEM
• Asset Acquisition
• Asset acquisition is obtaining a new asset or replacing an
existing one.
• Asset Maintenance
• A depreciation schedule is a record used to initiate
depreciation calculations.
• Asset Disposal
• Asset disposal is when an asset has reached the end of its
useful life or when management decides to dispose of it, the
asset must be removed from the fixed asset subsidiary ledger.
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 27
Data Flow Diagram for Fixed Asset System
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 28
Depreciation Schedule
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 29
THE PHYSICAL FIXED ASSET SYSTEM
• Acquisition Procedures
• When the fixed asset accounting clerk receives a receiving
report and a cash disbursement voucher. These documents
provide evidence that the firm has physically received the
asset and show its cost.
• Asset Maintenance
• The fixed asset system uses the depreciation schedules to
record end-of-period depreciation transactions automatically.
• Disposal Procedures
• The disposal report formally authorizes the fixed asset
department to remove from the ledger an asset disposed of by
the user department.
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 30
Computer-Based Fixed Asset System
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 31
Fixed Assed Record Structure
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 32
Asset Status Report
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 33
Fixed Asset Depreciation Report
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 34
FIXED ASSET SYSTEM RISKS AND CONTROLS
• Authorization Controls
• Fixed asset acquisitions should be formal and explicitly
authorized.
• Supervision Controls
• Management supervision is an important element in the
physical security of fixed assets.
• Independent Verification Controls
• Periodically, the internal auditor should review the asset
acquisition and approval procedures to determine the
reasonableness of factors used in such decisions.
James A. Hall, Accounting Information Systems, 10th Edition. © 2019 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 35