There are two methods in which one can do monthly payroll: manually, or automatically.
Manually – is having to manually calculate your payroll. Automatically – is having a system calculate the payroll.
There are always advantages and disadvantages to using any method, in this article I am going to comment on having a software system to assist with the payroll.
As the information will come from varying departments/employees, it is essential that you consult with all the departments involved to inform them what your requirements are regarding the information required. The methods used to collate information must be effective, efficient, and consistent with organisational values, policies, and legal requirements.
Resources must be developed and utilised efficiently and effectively for the retrieval of information on demand.
In recent years, new forms of storage have emerged in the form of document management (DM) and Document Image Processing (DIP). The advantage of these systems is that computerised payroll data can be transferred into a DIP system and be cross-referenced to images of the prime documents where these have been ‘scanned in’.
This type of storage forms part of an information technology system and involves the scanning of paper documents and converting them to digital images that are then stored on a CD/DVD.
Scanning can be conducted through photocopiers, multifunction printers, document scanners, and computers output microfilm. Document imaging preserves documents and improves overall office efficiency.
Large organisations with a constant flow of paper documents at several different locations can transfer all these documents into electronic form by scanning and simultaneously indexing the paper documents.
Advantages of document imaging technology:
Move towards a “paperless office”
Eliminates storage space
Submission via various departments
Disadvantages of document imaging technology:
Set up is expensive
Viruses can corrupt files
Incorrect filing and naming of documents
Access to stored information
Access to stored information must be controlled in accordance with organisational policies.
It is necessary to make certain that all authorised staff know how data is stored and the procedures for the disposal of data and are fully aware of their responsibilities concerning data security (e.g., where appropriate they should know who are the authorised staff).
Information must be recorded accurately, stored securely, in line with system requirements. The stored information must be maintained in accordance with organisational policies and legal requirements.
The following are security fundamental to any computerised system:
Security measures MUST include measures which prevent unauthorised access to or alteration/destruction of, hardware and software, including provisions to avoid accidental loss or destruction. This should, of course be covered by secure contingency/back-up procedures.
Strict controls on personnel having access to computer equipment and systems e.g., authorisation controlled/approved by the computer/payroll manager and continually monitored regarding reliability and performance in exercising security measures.
Full documentation of all hardware and software procedures. We all know how many specialist staff carry critical knowledge in their heads. Ensure that there is documentation and if necessary, insist on regular staff rotation to avoid being exposed to the “specialist staff leaving” problem.
Basic measures covering all payroll departments (computerised or manual): Lock doors, cupboards, files, etc. if authorised users are not in attendance.
Ensure that only authorised users have access to personal information. This can be a problem where employees in the same office ask for personal information – BE CONSISTENT – if the person is not authorised, say NO!
A review of the records capture system ensures that system quality records are in accordance with the organisation’s record keeping procedures or industry best practices, organisational quality control procedures, and customer service satisfaction.
The statutory requirements to store and retain payroll data include:
Data stored for the employer (Assist in audits)
Data stored for the employee (Queries)
Data stored for other external agencies (SARS, UIF/ Manpower)
In all the above we shall consider the reasons for storage and the likely duration of retention. Records of long-term value are identified at creation stage and are maintained according to long-term preservation and retrieval requirements. The two principal government departments with the statutory authority to require all employers to retain specific payroll data for specified lengths of time are:
Department of Labour (Manpower)
Both departments require the specified information to be retained for the last four years of entry (i.e., five full tax year). It should be remembered, however that this is only the minimum retention period, and the S.A. Revenue Service has powers to go back with no limitation under the Income Tax Act number 58 of 1962 (as Amended) in serious cases such as suspected malpractice or fraud.
External agency data requirements
Trade unions – not only the contributions may be held, but also any membership number
Courts – details of court orders are held
Local authorities – details of levies are held
Banks – an employer may operate a saving scheme, but only send details to the bank periodically
Medical Aid schemes – some employers take over the administration of a scheme and so enable their employees to benefit from preferential rates.
External Pension Fund - Managers including AVC schemes other than Employer Occupational Pension Scheme.
Insurance schemes administered on be behalf of employees.
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