PAYROLL APPLICATIONS

Chapter 2.8

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

Starter

Today we are looking at Payroll. What is Payroll?

log on and go to http://en.wikipedia.org/wiki/Payroll

Introduction to payroll

Usually done once a month All employees paid at the same time Batch processing Magnetic tapes

What’s on a payslip?

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

How it works

3 tapes needed Old (current) master file Transaction file New master file

What’s generated?

New master file Payslips Financial reports Error reports

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

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]

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

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.

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]

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

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