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Payroll Accounting 2012 Bernard J. Bieg and Judith A. Toland

Payroll Accounting 2012 Bernard J. Bieg and Judith A. Toland. CHAPTER 5 CHAPTER 1. THE NEED FOR PAYROLL & PERSONNEL RECORDS. Developed by Lisa Swallow, CPA CMA MS. Learning Objectives. Identify various laws that affect employers in their payroll operations

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Payroll Accounting 2012 Bernard J. Bieg and Judith A. Toland

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  1. Payroll Accounting 2012Bernard J. Bieg and Judith A. Toland CHAPTER 5 CHAPTER 1 THE NEED FOR PAYROLL & PERSONNEL RECORDS Developed by Lisa Swallow, CPA CMA MS

  2. Learning Objectives • Identify various laws that affect employers in their payroll operations • Examine the recordkeeping requirements of these laws • Describe employment procedures generally followed in a Human Resources Department • Recognize the various personnel records used by businesses and outline the type of information shown on each form • Identify the payroll register and the employee’s earnings record

  3. Many Laws Affect Payroll 0 • Fair Labor Standards Act (FLSA) • Federal Insurance Contribution Act (FICA) • Income tax withholding laws • Federal, state and local • Unemployment tax acts • Recordkeeping requirements • Fair employment laws • Other federal laws • State minimum wage and maximum hour laws and other state specific laws LO-1

  4. Current Legislation • Health Care and Education Reconciliation Act (HCERA) • Signed into law 3/30/10 • Most provisions effective 2014 • Immediately employer must include cost of employer-provided health coverage on employee’s Form W-2 • Patient Protection & Affordable Care Act • Signed into law 3/23/10 • Offers tax credit to small employers who offer health insurance to employees LO-2

  5. State Laws 0 • Workers’ Compensation Laws • Most states require employers to pay employees’ premiums • Can self insure if state approved • Different premiums based upon job class • State Disability Benefit Laws • Five states plus Puerto Rico have established laws requiring employers to provide disability benefits • This applies even if the disability did not arise due to employment! LO-2

  6. Human Resource System 0 • In many mid- and large-sized companies, the human resources (HR) system sets procedures/methods as relates to recruiting, selecting, orienting, training and termination personnel • FLSA requires stringent personnel recordkeeping – embodied in the Human Resource (HR) System • Requisition for Personnel notifies HR of need for new employees • Application for Employment completed by person seeking employment • No law prohibiting questions about religion, gender, race, age or national origin - but must tie into ability to perform job (for example, bilingual capabilities) • If application asks age/birth date, should contain ADEA language notifying candidate of anti-discriminatory provisions LO-3

  7. Human Resource System 0 • Reference Inquiry conducted before employment • Due to amount of litigation in this area, respondents should only verify facts and not offer subjective information • Really diminishes credibility of reference inquiries • Prospective employer may require applicant to sign Employment Reference Release • Must notify employee if seeking investigative consumer report • Hiring Notice alerts payroll department to new employee • Employee History Record contains performance evaluations, compensation adjustments, disciplinary issues, etc. Critical area – employment related litigation is very expensive and often times avoidable LO-3

  8. Payroll Accounting System 0 • All procedures and methods related to disbursement of pay to employees – documentation may include • Payroll Register - compiles data per paycheck • Employee Earnings Record - outlines earnings per period, quarter-to-date and year-to-date for each employee • Paycheck written or direct deposit made • Outsourcing Payroll • Many small- to mid-sized businesses hire a payroll company to do their processing • This is an independent company responsible for compliance LO-5

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