1. Chapter 2.8
PAYROLL APPLICATIONS

2. Objectives Know that payroll systems usually involve batch processing
Understand how master files & transaction files are used in payroll
Be able to identify the type of information on each file

3. Starter Today we are looking at Payroll. What is Payroll?
log on and go to

4. Introduction to payroll
Usually done once a month
All employees paid at the same time
Batch processing
Magnetic tapes

5. What’s on a payslip?

6. How does it work? Master file Employee number Name Details Rate of pay
Pay to date
Total tax
Total NI
Transaction file
Employee number
Hours worked this month
Overtime
Also holds detail of new workers/ex-workers/changes
TEMPORARY

7. How it works 3 tapes needed Old (current) master file Transaction file
New master file

8. What’s generated? New master file Payslips Financial reports
Error reports

9. Financial reports Information about: All employees
Different departments
Salaries
NI contributions
Taxes paid by employee and employer
Total pay paid by company to each and to all staff
All earnings & deductions
Summaries by department

10. Question
Alexandria Regional Bank is a small bank with three branches. At the moment, all paying in slips and cheques are gathered together in the course of the day and are then batch processed overnight.
Describe how data would be stored in the current system of batch processing. [2 marks]

11. Answer Two from: File will be held in a sequential manner
To allow for serial access
Code allocated for credit (paying in slip)
Or debit (cheque)
Used to process all records one after the other
When updating customer accounts

12. Question 2
Maharashtra fashions is a very large mail order catalogue company which sells a variety of clothes.
The owner has decided to computerise the company operations. The systems analyst suggested that the payroll system at the company should be computerised.

13. Computerising the payroll will require the creation of a master file and a transaction file.
Describe the information that will need to be stored about each worker on each file.[3 marks]
Describe the outputs of the payroll system
[4 marks]

14. Answer (Part A) Master file
2 marks for 4 or more items
1 mark for 3 items
0 marks for less than 3 items
Name/address, tax history, National Insurance history, pay so far this year, holiday entitlement, pension contributions, rate of pay, tax code, job title, employee number
Transaction file
1 mark for worker’s number and at least one of hours/days worked, bonus payments, holiday data, days sick

15. Part B Payslips with description of information included
Financial reports of payroll statistics
Exception reporting
Reports showing hours worked by individual
Report showing cost information by department or individual
Reports including the analysis of the turnover of employees together with detailed
absence reports
Payments to employees automatically generated using BACS
Tax and NI payments automatically made direct to the Inland Revenue
Specification of money required by company for payment to workers/Inland Revenue