Design of a Computerized Payroll System in a Control Conscious Environment

Date of Submission

1985

Document Type

Thesis

Degree Name

Master of Science in Accounting

Department

Accounting

Advisor

Don-Thomis Leonhardt

LCSH

Business--Data processing, Accounting--Data processing

Call No. at the Univ. of New Haven Library

AS 36 .N29 Acc. 1986 no.1

Abstract

Introduction, pp. 1-3: At the present time we see many organizations switching from a manual system to a computerized system. Why are they doing this? Every organization has goals, and they implement their policies to achieve these goals. Some of these goals are for profit while others include public service, but no matter what the goal, management is always looking for the best, fastest, and cheapest ways to accomplish them.

The manual system does not have all the advantages the computerized system has. For example, in speed the computer performs at very high speeds measured in trillionths of a second. In cost, the computer reduces the cost of a transaction. In errors, the computer is capable of self-checking and can make logical decisions. Therefore, most modern organizations are switching from a manual to a computerized system.

Saudi Arabia has another consideration which makes the computerized system so important. The population is small and wages are high. There is no low cost labor force within the population, making it impossible for many businesses to afford the number of employees needed. The computer is the best solution to this problem, because it will reduce labor costs. A company with three hundred or more employees needs a large payroll department to prepare checks. Payroll preparation requires more than twenty employees to do this job alone. However, with a computer system, the job can be done with five or fewer employees. The objective of the payroll department is to prepare checks accurately and quickly. This is necessary for accounting purposes and employee relations. The payroll department includes the following:

1. Up-to-date records of wages

2. Custom formatted forms (payroll checks, W-2, etc)

3. Management reports such as unemployment reports

4. Control of the system

5. Preparation of the earnings statements

6. Payroll register

7. Deductions and other time reports

The computerized payroll system is over 20 years old and there are few companies now using the manual system. To illustrate this point, P. Bartram wrote that "some statistics show how British companies currently calculate payroll: 16 percent use a computer bureau, 43 percent a main-frame computer, 12 percent a mini or microcomputer and 21 percent still do the job manually."1

1P. Bartram, "Your Payroll's Hidden Potential."

Director v. 37, April 1984, p.38.

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