Required: Prepare a system flowchart to document the payroll processing system at No-Wear Products. There will be automated processes. Hint: There are two internal entities.
As the internal auditor for No-Wear Products, you have been asked to document the company's payroll processing system. Based on your documentation, No-Wear hopes to develop a plan for revising the current system to eliminate unnecessary delays in paycheck processing. The head payroll clerk explained the system:
The payroll processing system at No-Wear Products is fairly simple. Time data are recorded in each department using time cards and clocks. It is annoying, however, when people forget to punch out at night, and we have to record their time by hand. At the end of the period, our payroll clerks enter the time card data into a payroll database for processing. Our clerks are pretty good-though I've had to make my share of corrections when they mess up the data entry. Before the payroll database is processed for the current period, human resources send us personnel changes, such as increases in pay rates and new employees. Our clerks enter this data into the payroll database and then files the original copy in a file for our records. Usually, when mistakes get back to us, it's because HR is recording the wrong pay rate or an employee has left and the department forgets to remove the record.
The data are processed and individual employee paychecks are generated. Several reports are generated for management - though I don't know what they do with them. In addition, the government requires regular federal and state withholding reports for tax purposes. Currently the system generates these reports automatically, which is nice.