A Framework for Assessing Business Cycle Accounting Controls - Expenditure Cycle - Payroll 1 CPE

The Payroll Expenditure Cycle of a business is focused on the functions that:

• Acquire labor
• Pay for it
• Classify, summarize and report what was acquired and what was paid

This cycle included the acquisition of, and payment for:

• Personal services (payroll), whether direct labor, indirect labor, executive and administrative, functional, etc.

In many entities, payroll-related functions are distinct from purchasing functions, so they are treated separately. This distinction extends to the cycle control goals. In larger entities, much of payroll administration is outsourced to companies, like ADP, that focus specifically on payroll operations. You might also see payroll as part of a “Human Resources” or HR department, that include recruitment and benefits administration. For the purposes of our discussion around accounting controls, we will focus on the payroll activity.

Course Key Concepts: Internal Accounting Controls, SOX 404, ICFR, Internal Control over Financial Reporting, Independent Public Accountants, Internal Auditors, Business Cycles, Treasury, Expenditure, Purchasing, Payroll, Conversion, Revenue.

Prerequisites

No advanced preparation or prerequisites are required for this course.  Students should have a basic knowledge of accounting principles and terminology.

Learning Objective

• Explore and understand the objectives and limitations of Payroll Expenditure Cycle Accounting Controls.
• Explore the process for risk assessing Payroll Expenditure Cycle Accounting Controls.
• Recognize the importance of Payroll Expenditure Cycle Accounting Control Goals.

Last updated/reviewed: Oct 21, 2024