Accounting Best Practices, Fifth Edition

Total Impact of Best Practices on the Payroll Function

This section selects many of the preceding best practices and merges them into a sample payroll department, in order to show the overall impact of best practices on the payroll function. Not all of the best practices are shown here because some are mutually exclusive. Though the solution presented would work well for most companies, a careful controller should review all of the best practices presented in this section and modify the payroll system discussed in this section, thereby arriving at a system that fits the particular needs of his or her company more exactly.

When selecting those best practices from the previous list in order to construct a more efficient system, it rapidly becomes apparent that the overall trend of the best practices is to streamline the existing payroll system by paring away unnecessary functions. Accordingly, this section notes a number of tasks that can be completely dispensed with. These items are noted down the left side of Exhibit 17.2 with a line through them, denoting processes that have been eliminated from the payroll processing system.

Exhibit 17.2. A Modified Payroll System

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As noted in Exhibit 17.2, a fully streamlined payroll function should avoid any additional tracking time for job costing, avoid special entries for employee advances, not include additional calculations ...