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com Page 1

Process Flow
Payroll

(insert date)
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Content Page
Overview 3
Organizational Chart 4
Process Maps 5-13

Table of Contents
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Company X Organization Chart
(Reporting Order Only)
Sr. Vice President/CFO
Controller Senior Financial Systems Admin. Financial/Actg. Coordinator
Financial Systems Admin.
Senior Contract Actg. Mgr. General Actg. Manager Billing/AR Manager
Contract Actg. Manager Senior Accountant

Accounting Manager Accounting Manager

Contract Actg. Manager
Billing/AR Specialist Billing/AR Specialist


Billing/AR Specialist
Asst. Actg. Manager Payroll Manager


Payroll Specialist

Accts. Payable Manager

AP Specialist


Actg. Svcs. Specialist


Staff Accountant
CEO
Sr. VP General
Counsel/Corp
Secretary
VP of Business
Operations
VP of Contracts
Sr. VPs and
VPs
Business
Operations
Managers
Project
Managers
Source: www.knowledgeleader.com Page 4
Process Overview Payroll
Pervasive
Business Risk
Major
Sub-Processes
Process
Risk
Payroll is not accurately processed or not accurately recorded
Employee Changes /
Updates Processing
Payroll
Processing
Payroll
Adjustment
Printing

401(k)
Reporting
Closing Reporting

Reporting

401(k) Reporting Closing
Employee Changes /
Updates Processing
Payroll Processing Payroll Adjustment
Printing

Employee information is incorrectly
entered into the system.
Policies and procedures do not exist
to support the payroll process.

Payroll hardware and/or
software are used inappropriately.
Payroll bank accounts are
improperly funded.

Records may not be retained in
accordance with legal
requirements.
Payroll activity is not accurately
calculated and recorded to the
subledger and general ledger
resulting in a misstatement of
payroll expenses and liabilities.

Unauthorized adjustments are
made to employee hours.
Payroll exceptions are not
accurately processed
and/identified in a timely manner
for appropriate processing.
Manual checks and signature
plates are inappropriately used.

Withholding and employee/
employer tax amounts are not
accurately processed and
recorded.

Accruals for pensions, vacation,
and bonuses are incorrectly
calculated resulting in
misrecorded or unrecorded
liabilities
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Payroll Process - Labor
Employees are set
up in System 2 by
the System 2
Administrator.
Timesheets routed to
Supervisor for
approval (timesheets
are signed and
approved
electronically through
System 2).
Approv
al
obtaine
d?
No
Manual
timesheets are
keyed into
System 1 by
Payroll.
System 2 Administrator
verifies all electronic
timesheets are completed via
the Status Screen in
System 2.
Yes
System 2
timesheets
exported to
File.
Research
and
Resolve.
Complete
d?
Payroll enters basic
employee
information
received from HR.

System 1
information is
transferred into
System 2 at (insert
time) daily.
Research
and
Resolve.
B
p.12
System
2
Employee
enters time
information
into System
2.
Total hours in Export
File verified against
System 2 Report to
ensure successful
export.
Timesheet Report
generated from
System 2 showing
total hours and
dollars reported.
Errors
Identifie
d?
Yes
A p.6
No
System 1
X
p.6
T
p.6
System 1
Payroll Process - Labor
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Payroll Process - Labor
Edit Report is reviewed
by payroll to ensure total
hours and total dollars
transferred to System 1
from Export File / System
2.
Errors
identifie
d?
The System 2
Administrator and
Payroll Specialist
research and resolve.
Yes
No
A
p.5
File imported
into Payroll
Module.
Edit Report
generated by
System 1.
Generate
Time Sheet
Edit by Name.
Generate
Time Sheet
Edit by
Account.
Contract Accounting
Department
reviews for proper job
codes and Labor
Categories (LCs).
Payroll Department
reviews to ensure that
statutory employees
have not charged leave.
Discrepancy
?
No
Research
and
Resolve.
Yes
C
C
D
p.7
p.7
p.7
System 1
X
p.5
T
p.5
Payroll enters all
new/changed
employee
information into
System 1.
M
p.8
System 1
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Payroll Process - Labor
Totals from
both reports
matched.
Print Labor
Distribution
Report
Labor Distribution
Report is matched to
Time Sheet.
Edit Reports by Name
and by Account.
Research and
resolve.
Discrepancy
?
No Yes
E
p.10
C
Posted labor feeds
into the Payroll
module.
Labor is posted to
the G/L module.
p.6
D
p.6
Timesheets in which
employees charged overtime
to a project are adjusted.
Timesheets in which exempt
employees worked overtime
are adjusted.
System 1
N
Z
p.13
p.10
Source: www.knowledgeleader.com Page 8
Payroll Process - Leave
Employee Leave Accrual is
calculated automatically by
System 1 based on
employee vacation.
Leave Edit
Report
Generated
Payroll verifies that
all new employees
receive the correct
accruals.
Payroll verifies that
terminated
employees are not
receiving any
accruals.
Leave adjustments
are made in the
Leave Edit tables.
Generate Leave
Accrual Report
from System 1.
Verifie
d?
Yes
Research and
resolve.
No
Discrepancies?
Research and
resolve.
Yes
Generate
General Ledger
detail from
System 1.
Staff Accountant
reconciles balances
on Leave Accrual
Report to G/L detail.
No
M
Leave is
posted in the
Leave
Module.
End of Process
p.6
System 1
Source: www.knowledgeleader.com Page 9
Payroll Process 401(k) Processing
Company Y sends
email to Accounting
and Payroll notifying
them that the 401k
deductions, 401k loans,
and profit sharing loan
information is available.
Payroll prints
out all 401k
deductions,
401k loans
and profit
sharing loans.
Payroll accesses
Company Y
internet site and
retrieves
Company X
related
information.
HR accesses
Web 401k and
sends stock
purchase
deduction
information to
Payroll.
Payroll enters
contribution, 401k loan
amounts, and stock
purchase percentages
into System 1 for new
employees and updates
all changes.
N
Next page
Excess life
insurance is
computed.
p.10
Source: www.knowledgeleader.com Page 10
Payroll Process Payroll
Payroll is
calculated and
Payroll Edit
Report is
produced.
Payroll Edit
Report
E
Errors
Identifie
d?
Go into Master
Screen and
recompute
Payroll for each
employee.
p.7
Yes
No
Errors
Identifie
d?
Research and
Resolve
Yes
No
G
p.11
Deductions (including
garnishments, 401K
loans, stock
purchases, etc.) are
checked against the
Payroll Edit Report.
Errors
Identifie
d?
Yes
N
No
Total gross payroll dollars
from the Payroll Edit
Report matched to the total
gross labor dollars from the
Labor Distribution Report.
Payroll Edit Report is
compared to original
deduction & loan
information from
Company Y.
p.9
Source: www.knowledgeleader.com Page 11
Payroll Process - Payroll
Manual Paychecks are logged in
the check log book. Direct Deposit
slips are logged into a separate
log book.
Print
Payroll
Posting
Journal
Posting Journal is
verified against the
Labor Distribution
Report.
Research and resolve.
Discrepancie
s?
Payroll Edit
Report
reprinted for
verification.
Payroll is
posted to the
G/L.
D
System 1
p.7
No
Yes
Payroll Dept. mails
checks to employees
via mail or direct
deposit. For
employees with direct
deposit, slips are
mailed to them.
Print
Manual
Paychecks
Print
Direct
Deposit
Slips
Print
Payroll
Check
Register
End of
Process.
Payroll Accrual and
Fed. Withholding
Spreadsheet are
reconciled against
941s.
Add Fed. Withholding amounts to
Fed. Withholding spreadsheet.
G
Direct Deposit Files are
sent to all necessary
banks.
Summary journal
page is produced
for use in calling in
withholding
amounts.
p.10
Source: www.knowledgeleader.com Page 12
Payroll Process Weekly
Site Manager/
Supervisor enters
Employees hours
onto Timesheet in
Access database.
Payroll
Specialist
processes
Access files
into System 2.
Employee
signs
Timesheet.
Timesheets
printed and
reviewed for
accuracy by
Site Manager.
Compare to
ensure
accurate
upload.
Accurate?
System 2
information is
transferred into
System 1 weekly
by Contract
Accounting.
B
p.5
No
Yes
Site Manager
saves Access
database to
the Shared
Drive.
Generate
Access
database
Summary
Report.
Research and
Resolve.
Generate
System 2
Summary
Report.
Edit runs
automatically to
ensure successful
processing from
Access to System 2.
Errors
identified
?
Site Manager, or
Company X Payroll
dept., researches
and resolves.
Yes
Staff
Accountant
uploads
Access file
into
System 2.
No
Accurat
e?
Yes
No
Run program
through Access
Database, which
electronically
signs and
approves
timesheets.
Actual, signed
timesheets for the
week are sent to
(location) to be
agreed to System 2
by the Controller.
Source: www.knowledgeleader.com Page 13
Payroll Process Prior Period Adjustment
Employee
realizes need
to adjust time
in a prior
period.
Employee emails
Accounting with the
specific time change that
needs to be made and the
reason.
If acceptable,
Accounting will
re-open the
period and notify
the employee.
Employee makes
necessary
changes and
signs-off on
adjustment.
Adjustment is
reviewed and
approved by the
Supervisor.
Once Accounting is
notified that the change
has been made, he/she
verifies approval and
accurate adjustment. The
change is recorded
into a log.
Time period is closed
out.
Z p.7