Question

You are an auditor at XYZ company and you are assigned to document the company's payroll processing system. The payroll system is very easy, first of all Employees record time data via time cards and hours in each department. However, manual data entry is required when employees forget to punch out, and corrections are required when data entry errors occur. Time Cards are collected into a document file which is sorted numerically by the Payroll Department. Prior to processing the payroll file, the personnel change files from the Human Resources Department (External entity), such as salary rate increases and new hires, are entered into the Payroll Database system by the clerk. Errors often arise from human resources recording incorrect pay rates or failing to delete records for terminated employees.

Answer 1

XYZ company's payroll processing system involves recording employee time data, manual data entry for corrections or forgotten clock-outs, and updating Payroll Database with personnel changes from HR.

Step-by-step explanation:

The payroll processing system at XYZ company involves several steps and external interactions, particularly with the Human Resources Department. Employees record their time data on time cards, which are processed by the payroll department to generate the payroll. Manual interventions are often necessary when employees forget to punch out or errors occur. Human Resources updates regarding personnel changes, such as salary increases and new hires, must be accurately reflected in the Payroll Database system to avoid payroll errors, which could include incorrect pay rates or failure to remove terminated employees from the system.

It is important for employers to accurately withhold and report payroll taxes, which include deductions from an employee's wages and taxes that the employer pays based on those wages. These payroll taxes are transmitted to various government authorities, and errors in the payroll process can lead to discrepancies in the amount of taxes withheld and paid, potentially resulting in penalties.