Section 12 –Payroll Systems &

Technology

Rachel Brooks, CPPImplementation Consultant

Paylocityrbrooks@paylocity.com

04/19/23

Objectives of a Computerized Payroll System

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Interfacing & Integration

Integration: Payroll, HR, Benefits into one shared database

Interfaces: Those departments transferring data from one system to the other & to other company systems

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Interfacing – working with other systems & Departments

Definition: the place where 2 systems meet! – i.e., they can “talk” to each other, be understood, and share data

HR, Benefits, Direct Deposits Labor Costs, Bank Accounts, GL Time & Attendance, Accounts Payable, SSA Outside benefit administrators; SUI, Taxes,

Child Support

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Integration of Payroll & HR Systems

Definition: System that provides a shared database for HR, PR & Benefits

Reasons to integrate: Streamline HR, PR, Benefits functions Consistency of data in 1 database Improvements in system Security!

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Service Providers - Advantages

Definition: Fully outsourced – i.e., like freelance accountants!

Low fixed costs No extra room or extra employees New services can be added Reduction in processing delays Reasonable processing costs Fewer research problems Networking Training & Support

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Service Providers - Disadvantages

Lack of control over security Filing & depositing errors Little flexibility for late changes Unique needs create problems Potential high variable costs No control over breakdowns

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Application Service Provider: ASP

Definition: provide your company with an application to process your payrolls

Installed on your servers Accessed by you on their servers Fee based on each employee’s payment

processing Usually no need to hire add’l staff to process

payroll

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Business Process Outsourcing: BPO

Definition: outsourcing of business processes & functions, including support, including payroll & benefits administration

i.e.: the BPO takes over the entire business process – PR, HR & Benefits and runs it!

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In-House Payroll Systems

Definition: Computerized payroll system located on company premises

Hardware: Computers, networks Real time or batch processing Advantages:

Control; Access; ↓Downtime; Security; Scheduling; Applications

Disadvantages: Space, Costs; Staffing; Capacity; Obsolescence;

Disaster recovery; wrong computers!

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Selecting a Computerized PR System

Integration & Interfaces? Functions? Who will need access? How will data be processed $$$$$$$ -- how much? Get input from all users – their needs &

desires

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Selecting a Payroll System

1) Build a Project Team

2) Analyze what the System needs to do

3) Prepare a RFP

4) Select a System

5) Implement the System

6) Evaluate the System’s Performance

7) Controls & Security

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Step 1 – Build a Project Team

Payroll HR Benefits Accounting Tax Budget/Finance MIS Management

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Step 2 – Analyze what System needs to do Document current system and it’s problems Define Objectives Define requirements

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Step 3 – Prepare a Request For Proposal

Purpose in issuing the RFP: Why new system is needed Specific payroll info – size, frequency, unions,

salaried, hourly Earnings & Deductions Functional requirements now & future HR & Benefit integration?

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Step 4 – Select a System

Ask for demo References – either by phone or site visits Ask for demo – of certain problems that vendor states

can be addressed Ensure all gov’t reports, taxes, EIC can be handled Ask for demo on client server, not vendor’s Service & training support and cost? All costs included on proposal both now & future Require flexible & user friendly report writer

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Step 4 cont’d: Mistakes to avoid

Failure to provide time to do the job right by team members

Omitting all departments affected on team Failure to prioritize Not considering future needs

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Step 5 - Implementation

Preparation – goals, time for team members, outside consultants?, time for the project, support by upper management

Training Gap Analysis Converting old data & adding new Testing

Parallel testing System conversion!

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Step 6 – Evaluate System Performance

Internal report requirements Unexpected legislation Radical benefit changes New Unions? System expansion

These should be periodically reviewed!

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Controls – Putting them into Place

System Edits Auditing & Data Sampling Batch controls Correction procedures Balancing & Reconciling

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System Documentation

Include: Confidentiality statement; Introduction & high level overview; Navigation; Processing; Calendar “Guts”

Leave out: Company Policies Technical Material

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System Documentation, cont’d

Packaging Assign to a job – not a person! Keep it up to date Documentation promotes control!

Useful for cross-training Procedures eliminate shortcuts Ensures consistency by users

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Providing System Security

Personnel concerns: Segregation of duties Rotation of job assignments Paychecks go to payee only! (not to buddy) Conduct physical payouts – No Phantoms! Rotate some duties to accounting Background checks

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Security, cont’d

System Security Limit access Secure files Develop audit trails Anti-virus Backup! – and store off site

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Security cont’d

Physical plant issues Climate control Overheating Cold Power surges Dirt Humidity Power

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Disaster Recovery

Fires, floods, hurricanes, earthquakes, terrorism, explosions: employees still must be paid! Interim Office space Equipment rental Temporary housing Backup files – off site! Employee safety Communication Electronic vaulting

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Automated Time & Attendance

Benefits: Less time spent on processing Fewer errors Decreased costs

FLSA, FMLA and SOX compliance Results in penalties if not DOL found – 48% of those audited failed to

comply with federal labor laws!

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Selecting a Time & Attendance System

Rules Engine Integration with HR, PR & Accounting

Systems Configuration vs Customization Web-based Alert notifications – Secure ESS and MSS No PC software04/19/23

Employee & Manager Self Service

What is it? – Allows employees and managers to manage time-consuming administrative tasks – such as benefit enrollments, address changes, etc. through: Kiosks IVR Internet & Intranet

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Manager Self Service

Allows managers to initiate changes to direct reports Promotions, salary changes, transfers Performance appraisals & salary administration Changes can be routed for approval via workflow

Outsourcing: ASP/SaaS: Application Service Provider aka Software as a Service Hosted applications – such as Payroll, HR, Benefits Employee gains access via their own computer

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Implementing Internet Technology

1. Build a team

2. Select hardware/software

3. Encourage technology use

4. Security

5. Develop codes of conduct

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Web Enabled Applications

Definition: uses the Internet as a means of accessing an organization’s data and the HRMS application logic Pay stubs W-2’s

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Keep thinking (and repeating)……

I will be a CPP!

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