Payroll Process

Payroll Human Resource Information System Executive (PHRISE)-GSC takes charge of the payroll processing for employees of fourteen (14) Asia-Pacific countries (i.e., Philippines, Australia, Singapore, Malaysia, Hong Kong, India, New Zealand, Vietnam, Indonesia, Thailand, Cambodia, Sri Lanka, Bangladesh and Nepal. Seven (7) of which are outsourced to other independent payroll processors for the computation of the actual pay. Payroll processing for the rest of the countries are in-house. In 2013, Sri Lanka, Bangladesh and Nepal were recently added from the group.

On a monthly basis, PHRISE-GSC receives an e-mail attached payroll instructions and documents needed for payroll processing. These should be submitted to PHRISE-GSC not later than 7-9 days before credit date for countries with independent payroll processor and not later than 3 days for in-house payroll computation.

Payroll documents submitted by various personnel are as follows:

From Human Resource (HR): 1. Attendance Sheet for the given month 2. Joiners and Leavers report (New Starter Forms and Leavers Forms submitted every week) 3. Salary Update (HR1 form, includes information such as promotion) 4. Employment Status Update such as leave of absence, maternity leave, etc. (These are sent to PHRISE-GSC as HR receives them.) 5. Centre Movement (also provided by Centre Manager (CM) and Area Operations Manager) 6. Month end list of all active employees 7. Organization Structure 8. Referral Incentive Form

From CM, Sales Service Center (SSC) and GSC Managers: 1. Planned Vacations 2. OT Sheet

From Commission Analyst (CA)-GSC (in spreadsheet file): 1. Commissions Report (every 15th of the month) 2. Bonus Report (every 15th of the month)

PHRISE-GSC only processes payroll documents submitted by authorized personnel (i.e., HR, CM, SSC, GSC Managers and CA-GSC).

Based on the payroll documents received, PHRISE-GSC prepares a payroll template. This document consolidates all employee compensation and benefits details for the payroll period (e.g., leave, overtime, commission, bonus, etc.).

For countries whose payroll processing is outsourced, PHRISE-GSC sends the payroll template to the service provider for each country. Once the service provider is done processing, it sends the payroll computation to PHRISE-GSC which it will use for the preparation of the payroll transaction register. The payroll transaction register includes details such as employees gross pay, deductions and net pay for the period.

For countries whose payroll processing is performed in-house, PHRISE-GSC performs the payroll computation and prepares the payroll transaction register.

The Payroll Manager and the Financial Director (FD) review the payroll transaction register by checking if the details in the payroll documents and payroll template are correctly reflected in the payroll transaction register (e.g., new hires are included and resigned employees are excluded; deductions are reasonable; salary is adjusted accurately, etc.).

PHRISE-GSC prepares a payment template based on the payroll transaction register. The payment template is the file uploaded to the online banking website for payment processing. Then, the PHRISE-GSC uploads the payment template.

The PHRISE-GSC sends a screenshot of the details uploaded in the online banking website to the FD for review. The FD checks if the total amount of salaries to be debited to the bank account is correct before approving the release of payment in the online banking website.

Based on the payroll transaction register, PHRISE- GSC prepares a journal entry template for the payroll transaction. The General Ledger(GL)-GSC reviews the journal entry template. The PHRISE-GSC sends the reviewed journal entry template to the Management Accountant (MA)-GSC for the posting of the journal entry to the SUN.

Based on the payroll transaction register, MA-GSC prepares a Salary Variance Report which shows the movement of the salary expense from the previous month. The PHRISE-GSC provides explanations for the significant movements. The FD and MA-GSC review the Salary Variance Report and check if the explanations for the significant movements are valid and reasonable

Requirement: There are five major risks on the payroll process above. Identify ONE risk and its corresponding key control to address this risk. Write your answers in not less than five sentences.