1. Module 4: The Human Resource Management Cycle
Accounting Information Systems: Essential Concepts and Applications Fourth Edition by Wilkinson, Cerullo, Raval, and Wong-On-Wing
Module 4: The Human Resource Management Cycle
Slides Authored by Somnath Bhattacharya, Ph.D.
Florida Atlantic University

2. Objectives of the Cycle
1) To ensure that the status, pay rates of salaries, and pay deductions of employees are authorized
2) To pay for actual services rendered
3) To record, classify, distribute, and report employee-related costs promptly and accurately

3. Typical Functions & Related Organizational Units of a Human Resource Management Cycle
Accounts Payable and
Cash Disbursements
Cost
Distribution
General
Ledger
Personnel
Timekeeping
Payroll
Measure & record the services rendered
Issue and
distribute
pay checks
Post trans-
actions and prepare required
reports & statements
Distribute costs for employee services
Establish
pay status
Prepare
paychecks
Maintain
employee
records
Maintain
labor expense
records
Figure M 4-1

4. Source Documents of Data Input
Personnel Action Form
Time and/or Attendance Form
Job-Time Ticket
Paycheck

5. A DFD of the Human Resource Management Cycle
See text for details
Personnel
department
Employees
1.0
Establish
pay status
Department
managers or
supervisors
2.0
Measure and
record
services
rendered
Employee earnings records
General ledger records
3.0
Prepare
paychecks
Bank
4.0
Issue and
distribute
paychecks
5.0
Distribute
costs for
employee
services
6.0
Prepare
reports and
statements
Employees
Government
agencies
Bank
Managers
Figure M 4-5

6. Data Processing: Manual
Establishment of pay status
Measurement of the services rendered
Preparation of the paychecks
Issuance and distribution of paychecks
Distribution of the labor costs
Preparation of the required reports

7. Data Processing: Computerized
Time data entry
Paycheck preparation
Pay status changes

8. Information Output
Operational Listings, Statements, and Required Reports
Inquiry Screens
Managerial Reports

9. Data Management: File-Oriented Approach
Employee Payroll Master File
Personnel Reference and History File
Skills File
Time Record Transaction File
Paycheck Transaction File
Compensation Reference File
Personnel Planning File

10. An Entity-Relationship Diagram of the Human Resource Management Cycle
Employee pay deductions
Personnel clerk
Cashier 1 1 1
Cash disbursement (payroll) 1 n
Personnel action n
Taken by/for 1
Paid to/by
Employee 1 m 1 n
Provides
Performs
Leads to
Withdraws n n 1 n
Service (Time)
Cash
Skills
Figure M4-9

11. Risk Exposures Pertaining to the Human Resource Management Cycle - I
Figure M4-10

12. Risk Exposures Pertaining to the Human Resource Management Cycle - II
Figure M4-10 Continued

13. Risk Exposures Pertaining to the Human Resource Management Cycle - III
Figure M4-10 Continued

14. Control Objectives
All services performed by employees, including hours worked on specified tasks, are recorded accurately and in a timely manner
All employees are paid in accordance with wage contracts or other established policies
All paychecks are calculated accurately, with due allowance for authorized payroll deductions and approved benefit programs
All costs for employee services are distributed to accounts in accordance with clearly established accounting policies
All required reports are accurately and completely prepared in accordance with prescribed laws and regulations and submitted by their scheduled dates

15. Application Controls - I
1) Prepare pre-numbered and well- designed documents relating to payroll payables and cash disbursements
2) Validate data on time records as they are entered for processing by means of edit checks
validity checks on employee numbers
limit checks on hours worked
field checks on key identification and amount data
relationship checks on employee numbers and related departments

16. Application Controls - II
3) Validate the results of data processing by means of edit checks
Sign check
Cross-foot balance check
4) Correct errors detected during data entry
5) Issue personnel actions promptly on the basis of valid authorizations
6) Reconcile the hours reflected on job-time tickets with the hours shown on the attendance time cards

17. Application Controls - III
7) Pre-compute batch control totals on hours worked and on net pay amounts. Compare batch totals with totals computed during paycheck preparation and during postings to the employee payroll master file, respectively
8) draw paychecks on separate payroll-imprest bank account
9) Retain voided paychecks in order to account for all paycheck numbers
10) trace unclaimed paychecks back to the time records and employee payroll master file in order to verify that they belong to actual current employees

18. Application Controls - IV
11) Review a preliminary payroll register before the paychecks are printed in order to determine that all errors have been corrected
12) Print payroll account summaries periodically to enhance the audit trail

19. Web Security Procedures
Authentication
Authorization
Accountability
Data Transmission
Disaster Contingency and Recovery Planning

20. Accounting Information Systems: Essential Concepts and Applications Fourth Edition by Wilkinson, Cerullo, Raval, and Wong-On-Wing
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