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The Accounting Cycle Essay

1489 words - 6 pages

Accounting Cycle Description Paper
Team A
ACC/340

Accounting Cycle Description Paper
The payroll processing cycle is very time consuming and tedious when done manually. Therefore, the ‘Mom and Pop’s Grocery Store’ has elected to integrate its payroll with a computer software program. With this implementation the payroll process will be more efficient and effective. This paper will explain how the payroll processing cycle for ‘Mom and Pop’s Grocery Store’ integrates onto an enterprise-wide accounting information system. An enterprise-wide accounting information system “focuses on the business process of the organization as a whole” (Bagranoff, Simkin, & Stand, 2008, p. 7).
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This AIS system will provide the right information to the right people in a timely manner.
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(Murphy, Dr. L., 2009)

Integration
The first assignment for the payroll integration is to create a plan of action. Having a plan of action will help keep the integration under control and the team leader should review the plan with other team members to get his or her buy-in to the project (Mind Tools, Ltd., 2009).
Implementation
For the payroll implementation, the source documents needed are employee master file, W-4, direct deposit information, payroll deductions, garnishment details (if any), any paid time off balances, 401k balances, prior taxable wages, Employee Stock Purchase Plan (ESPP), and other accumulators (personal communication, October 1, 2009). The use of payroll earnings and deductions paid to date will ensure the earnings, deductions, and taxes paid are accurate in the new enterprise-wide AIS system. A contact with the bank is necessary to verify that direct deposits will not be affected by the system changes. Once the source documents are gathered, the team leader should decide who will perform the tasks, and designate each task to the best person. A check-off list for the installation of the hardware and software should be set up by the IT member to ensure that any new configuration requirements are set and installation has been done correctly, and tested.
Internal Controls
Internal controls are those processes and actions designed to protect a company’s assets and management practices. Additionally, by implementing internal control measures a company can be sure that their financial information is reliable, that the assets and records of an organization are not stolen or destroyed, a company’s policies are followed, and government policies are met. These practices protect the interests of all stakeholder groups and hold a company accountable (Bagranoff et al, 2008).
According to the Alliance for Nonprofit Management Organization (2003), the first step in developing an effective internal control system is to identify those areas where abuses or errors are likely to occur. In the case of payroll, accounting errors, abuses, and fraud can occur in a number of ways: the payment of wages to “ghost” employees, improper authorization of disbursements, not acting in good faith as a trusted agent, timely and proper payment of tax deposits, and filing of payroll tax returns to the proper tax authorities.
The implementation of internal controls for proper handling of payroll processes ensures the separation of duties, accountability, authorization, review, approval, and the security of assets of the company.
Separation of Duties
The website for Blink (2009) provides best practices for separation of duties: (1) enlist different people to process payroll, record personnel data, and provide approval for online payroll actions; (2) someone other than the data entry person should review monthly...

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