Payroll constitutes one of the most important and sensitive areas in corporate administration. Employees count on their paychecks, using this money to meet their own financial needs. The department responsible for payroll must ensure that it is done accurately and on time. This department must also maintain confidentiality in regard to the sensitive employee data that are managed. Payroll responsibilities fall on both the human resources department and the accounting department.
Human Resources Responsibility
The human resources department maintains employee data in the payroll system. This includes the individual’s Social Security number, pay rate information, rate premiums paid to the employee and the number of exemptions claimed. This information can also include bank account information if the employee receives her paycheck through bank direct deposit. Some employees also incur garnishments for child support obligations or for financial judgments placed against them. This represents personal information belonging to the individual, and only authorized employees should have access.
The accounting responsibility includes managing the cash payments made to each employee, recording the payroll tax liability for both the employer and the employee, ensuring that each organization receiving payment from wage garnishments is paid and reconciling the total amount paid out to employees. Many companies maintain separate bank accounts for payroll, and the accounting department must reconcile this bank account with the cash balance reported on the company’s financial records. Governments receiving payments as a result of payroll tax liabilities must be paid on time from the payroll bank account. The accounting department tracks these liabilities along with the due dates of each and ensures that payments are made.
Collaboration and Overlap
The accounting department and human resources department share the overall responsibility for payroll. The human resources department manages the employee data, while the accounting department manages the financial data. These two departments must collaborate, especially when new employees are hired and entered into the system and when bonuses are calculated and paid out. Some duties overlap, such as data entry and responding to employee questions. In many companies, the specific employees involved with payroll form their own payroll department and include both human resources personnel and accounting personnel.
Payroll requires the services of both human resources personnel and accounting personnel. With both departments involved in the payroll process, each can oversee the other’s actions and hold it accountable to maintaining accuracy and meeting deadlines. This provides an internal control for the organization in regard to payroll responsibilities.