CHAPTER 1 INTRODUCTION Computer serves as a big help in our society today. It provides the most storage capacity and processing capabilities. It also serves great advantage for improving the effectiveness and efficiency of payroll processes. The role of Information Technology is constantly evolving and has changed significantly and now enables new competencies that make new strategies no matter the sector is. Businesses of all sizes make use of computer based systems because of its great benefits to improve efficiency of business transactions, not only does this kind of technology improve their daily routine and processes, but also boost their daily business transactions, communications and general operations. Business establishments or corporations have to use modern technology to be competitive. The application of up-to-date technology helps businesses solve complex problems making daily office tasks faster, secured and most of all cost-saving. Payroll is the sum of all financial records of an employee. In accounting, payroll refers to the amount paid to employees for services they provided during certain period of time. Payroll system is the heart of every Human Resource System in an organization. [STUD2011] The developed system for Benigno “Ninoy” S. Aquino High school is classified as a Transaction Process System (TPS) because it can provide accurate data and reports in a certain business, In this case the payroll in the said school.

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Transaction Processing System has characteristic which is applicable to the proposed system. It includes (1) rapid response which means it can have a fast. Performance and rapid result in computation (2) reliability which can provide a welldesigned backup and recovery with low failure rate (3) inflexibility which will treat every transaction equally and (4) controlled processing which can organize and maintain data. Benigno “Ninoy” S. Aquino Highschool is located at Aguho St. Comembo, Makati City Philippines. As an annex of FABC (Fort Andres Bonifacio College) High School Department, it started with four (4) teachers teaching four (4) First Year classes at old Mater Dolorosa (now Mirror of Justice) The head teacher then was Miss Tomasa Sinad, a former nun. Miss Sinad did not stay for long as she migrated to the United States. She was succeeded by Mrs. Percida Dela Cruz as Officer-in-Charge and as Department Head of Filipino Department in concurrent capacity. Not for long, Mrs. Dela Cruz was recalled to her mother school to concentrate as fulltime Department Head and was succeeded by Mrs. Remedios C. Pajo. Successively, BNSAHS has been under the helm of other educators that followed namely: Dr. Nora H. Serdena, Mr. Wilmore C. Moredo, and Dr. Reynaldo S. Estacio. The following year, it offered, a second year class , then it added one third year class the following year until finally in 1979, FABC High School Department-Comembo Annex held its first graduation ceremony in the plaza of the Comembo Elementary School. On January 25, 1993 at a consultative meeting of the Sangguniang Barangay ng Comembo headed by Barangay Captain Pedro Daza and the General P.T.A. President of

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the school, Mr. Felix Garcia, a joint resolution was passed requesting the Municipal Council, thru Mayor Jejomar C. Binay that FABC High School Department – Comembo Annex be Converted to an independent community or barangay high school. The motion was filed by Mr. Garcia and duly seconded by Kagawad Ernesto Aguilar. The Makati City Council approved the City Ordinance 74-278 series of January 13, 1995 creating an independent municipal high school and renaming FABC High School Department Comembo Annex as BENIGNO “Ninoy” S. AQUINO HIGH SCHOOL. The school nowadays has around 7,500 students which provided with quality education with the help of the dedicated teachers and staffs. The school has 217 teaching staffs divided into different departments such as Mathematics, English, Filipino, Science, AP (Social Studies), MAPEH, Values and TLE. The 35 non-teaching staffs are also divided into departments such as, Administration Office, Disbursement Office, Accounting, Guidance, Property, Records (for Students Record), BEIS (for school records), Library and clinic the other employees are consists of 18 security personnel and 43 utility staff and maintenance. Under the Republic Act No. 4670, otherwise known as the “Magna Carta for Public School Teachers”, provide that teaching hours for teachers shall not be more than six (6) hours. The teaching staff’s salary is determined by the salary grade step in basic salary table provided by the city government. (See appendix A). The teaching staff is consists of 3 categories, Teacher 1, Teacher 2, Teacher 3, respectively. The basic salary of teaching personnel is fixed depending on the salary grade step. They are not entitled to overtime pay and night differential however teachers are granted with benefits likewise

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clothing allowance, chalk allowance, Bonus (1 month salary + 5000 pesos), Productivity pay and Performance Bonus. 1.1 Statement of the Problem After a series of data gathering, observations and interviews, the developers were able to come up with the general problem stated below. General Problem Benigno “Ninoy” S. Aquino Highschool is having a difficult time in manually checking and validating the DTR produced using the school’s Biometrics and preparing all the necessary computations in the Form 7 that is vital requirement in the payroll process. In the current system of BNSAH, the disbursement head will print all the daily time records of employees using her computer which is connected to the school’s biometrics. It will be handed to the disbursement assistant to check one by one the daily time record of the employee. The checking of tardiness and absences will be done manually. The schools biometrics tends to register more than 1 entry in a single time in which leads to another checking or verification but this time to the different department heads. This process consumes time and effort requiring tedious work to compute the FORM 7.

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Specific Problems 

Current biometrics does not have a program that will automatically compute all the tardiness of the employees. BNAHS uses biometrics that only stores time in and time out of employees

but does not specifically possessed a program that will automatically computes the tardiness of employees which results to tedious workload on the part of the Disbursement Assistant in checking every DTR (form 6) of teaching and non teaching staffs then manually calculating all the absences and tardiness of each person. 

Reliance to the logbook that leads to inconsistent DTR entries that requires validation from every department heads. The school uses a logbook apart from the biometrics; this procedure is

prone to inconsistent DTR entries that needed validation from every department heads; thus inviting for the Employee to disregard the biometrics and just rely on the logbook for their time-in and time-out. 

Tedious workload on the preparation of the Form 7 due to the large number of employees and human error occurrences in the computations that affects the payroll process. Form 7 is the monthly matrix of report of service. In the current system,

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all data is computed manually which takes a lot of time and effort because of the large number of entries needed and to be validated and computed. Mainly, PVP (Proportional Vacation Pay), Absences, Contributions/Deductions and Net pay. Form 7 is the main requirement of Dep-ed Regional Office for releasing the salary of all teaching and non-teaching employees.  Slow generation of vital reports because of the unorganized records. The generation of reports takes time and effort because of unorganized employee records wherein the Assistant has to find a specific employee file on different folders. Report such as Form 7 and PVP Table is being printed out using a typewriter that is not ideal to the company that has plenty of employees.

1.1.1 Project Rationale The payroll system with biometrics technology for Benigno “Ninoy” S. Aquino Highschool will be developed to provide the management a system that would smooth the flow of the process of generating Form 7 needed to fulfil the requirements of the Regional Office of Department of Education for the teachers and non-teaching’s salary. The developed system will introduce immense aid and benefits the Benigno “Ninoy” S. Aquino Highschool Faculty and Staff, the main beneficiary of the Payroll System with Biometrics Technology. The system has faster and easier payroll transaction, and can monitor and automatically provide a report regarding the Form 7. The Disbursement Department will also benefit to the system because their work would be easier and their

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workload will be lessened and they can perform other task. Lastlty, To the STI Institution, The system would serve as a good basis by the institutions in monitoring the ability of the students in developing a system. It would also serve them as a guide to establish new strategies for an advanced training for students. The institution could create a good merit for having skilled students specifically in programming. Lastly, the system would lead the institutions for molding students into highly skilled, intellectual citizen. 1.2 Current State of Technology In business, ICT is often categorized into two (2) road types of products: the traditional computer-based technologies; and the more recent, and fast-growing range of digital communication technologies. Transaction Processing System (TPS) is an information processing system for business transaction involving collection; modification and retrieval of all transaction data. To achieve performance, reliability and consistency, data must be readily accessible in a data warehouse, back up procedures must be in place and the recovery process must be in place to deal with the system failure, human failure, computer viruses, software applications or natural disaster. [JANA2012] The developed system for Benigno “Ninoy” S. Aquino High school is classified as a Transaction Process System (TPS) because it can provide accurate data and reports in a certain business, In this case the payroll in the said school. In this study, all the characteristics of Transaction Processing System mentioned above will be applied in developing the system that will greatly reduce the commission of errors in the payroll of BNSAHS.

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The following discussion focused on the entire process of payroll system currently existing in the said school. Time Keeping The school has an existing biometric that stores the time in/time out of every teaching and non teaching personnel but does not do automatic computations such as tardiness/late or absences. The management uses logbook apart from the biometrics. Every department has a separate logbook that the disbursement officer uses as a back-up for the inconsistent data entries present in the hard copy of the attendance. . The print out of the DTR (Form 6) will be validated to the department heads and designated to the disbursement head for checking and validation and for producing of FORM 7, the primary requirement of payroll. Computing the Net Salary The employee’s basic salary is determined using the salary grade step provided by the city government. Teaching personnel is not entitled to any double pay, legal and non-legal holidays provided with pay Saturday and Sunday. Net salary should be determined by subtracting the total deductions to the basic salary GSIS= SALARY * 9% PAG-IBIG = P100 PHILHEALTH = Deduction will based on the monthly salary/ bracket (See Phil Health table)
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BASIC SALARY-(TOTAL DEDUCTIONS+CONTRIBUTIONS) = NET SALARY Withholding Tax In Section 79 of the National Internal Revenue Code (Republic Act No. 8424), as further amended by RA 9504, all employees and workers who earn above minimum wages is subject to withholding tax in accordance with the prescribed Revised Withholding Tax Table Effective January 1, 2009. The law classify a dependent as a “legitimate, illegitimate or legally adopted child” living with the taxpayer and not more than 21 years old, unmarried and not employed. Withholding Tax = ( ([Taxable Income] - [Bracket or Exemption] ) x [%over] ) + [Bracket Tax or Base Tax] Computation of Mandated Deductions Deductions mandated by law like GSIS, Phil Health, Pag-ibig and Withholding Tax are computed based on the monthly salary of the employee and on the particular salary bracket., However, Pagibig is computed by getting the two(2%) percent of the employee’s salary or 100.00 pesos while the withholding tax is based on the exemption status of an employee.

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Tardiness and Absences Total number of lates can be deducted in minutes can be subjected to offset or subtracted to leave credits. Lates can be computed through; [(salary/days of the month)/(working hours)]/60*number of lates (minutes) There two kinds of absences, with pay and without pay. With pay absences are those leave credits such as sick leave, vacation leave granted to teachers. Number of leave credits for teaching staffs varies depending on extra work outside the academic schedule e.g elections and special orders given by the school or city municipalities. Nonteaching staff of BANHS are entitled to ten (10) vacation leaves and fifteen (15) days of sick leave. Un-authorized absences are subjected to absences without pay. Pay Period rd BNAHS paying period is on monthly on 22nd or the 23 th of the month and the

cut off is on the 15 . The salary of the non-teaching and teaching personnel comes from the regional office of DepEd while security and maintenance personnel are handled by their Municipal Office. All the salary is being distributed through the use of ATM.

Requesting for Approval The Disbursement Assistant prepares the FORM 7 and secures the approval of the Disbursement Head and the Principal of the school.

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Leaves Employees are granted leave credits such as sick leaves or vacation leaves. Teachers earn leave credits by participating in government activities e.g. election and or special orders requested by the school or city municipalities. Leave with pay credits can be subjected to offset or deducted if all leave credits are used.

Descriptions GROSS PAY

Computations Basic Pay Determined in the Salary Grade Step (See Appendix) Basic Salary-(Total Deductions+Contributions) ([Taxable Income] - [Bracket or Exemption] ) x [%over] ) + [Bracket Tax or Base Tax] Gross Pay * 9%

NET PAY

WITHHOLDING TAX

GSIS PAGIBIG

Basic Salary - 100 Php PHILHEALTH Employee Share depends on the compensations range per month Tardiness= [(salary/days of the month)/(working hours)]/60(number of lates (minutes)) For Teaching six(6) working hours

LATE

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For Non-Teaching eight(8) working hours ABSENCES PROPORTIONAL VACATION PAY 13th MONTH PAY No. of Days absents/30 3 absences = 1 day deduction to PVP 1 month Salary + Cash Gift given May and December

Table 1.2.1 Salary Computation 1.2.1 Review of Related Studies and Literature In order for the developers to set an idea on how to develop a study entitled “PayrollSystem for Benigno “Ninoy” S. Aquino High School”, the developers have adopted some ideas from existing foreign and local systems. The ideas of the developed system were patterned to these studies so as to accomplish the needs to come up with a better computerized system. Through the use of the Internet, the developers had surfed sites that prodded related foreign and local studies to the developed system.

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1.2.1.1 Foreign Study Intuit payroll

Figure 1.2.1.1 Intuit Payroll Intuit payroll offers two kinds of payroll systems, Intuit Payroll Software and Full Payroll Service. In Payroll Software, the system lets the client to control their own payroll by entering hours on a screen and the software calculates for them. While in the Full Payroll Service, the service do all the work. Total pay and hours are instantly calculated so the client can print checks or use free direct deposits. They also handle the payroll tax payments and forms. They setup, run pay roll and file payroll taxes, calculate pay checks and all payroll taxes, offers free direct deposit and year-end w-2s, no tax pre-payment, instant alerts from their error detection technology, guarantees error-free pay checks and payroll taxes, Free live-based support from experts , Free new hire reporting for w-2 employees, detailed profitability views with job costing, run payroll from iPad, iPhone or android and integrates with quickbooks.

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On the Developers point of view, Intuit Payroll is one of the top of the line payroll softwares. The Developers learned things about necessities in the payroll system.

ZPAY Payroll System

Figure 1.2.1.2 ZPAY Payroll System ZPAY Payroll System is an easy-to-use pay roll system that even a person with no accounting experience can use it. ZPAY tracks vacation, sick and holiday pay, bonus commission and reported or collected tips. It also offers pays by hourly, salaried, commissioned and non-employee contract workers. It comes with federal and state tables and can be edited. These features had helped the developers in the development of the system. The difference of the ZPAY Payroll System to the proposed system was the consistency of the reports such as employees report, cost accounting reports, payroll history reports and tax liability reports. In line with the proposed project, the developers
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had research the said payroll software and applied some of the features such as monitoring of leaves of each employee. ASA Quick Books

Figure 1.2.1.3 ASA Quick Books Quick Books is a good payroll module. This payroll system focuses on leave attendance. It also enables the user to maintain the time and attendance of the employees through time keeping system that would capture and record attendance of the employees. Furthermore, the system also includes maintenance of employees information .QuickBooks also produces various monthly, quarterly and annual payroll tax return and forms. The Developers had researched about QuickBooks Payroll System because of its features like monitoring the employees on leave and their corresponding leave credits. The developers adopted its key features such as: the maintainability of the employee’s information and monitoring of employees on leave and leave credits. This was applied so that the disbursing head could update and alter employee’s information.

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1.2.1.2 Local Literature Simple Office Package Payroll Management Software

Figure 1.2.1.4 Simple Office Package Payroll Management Software The SIMPLE OFFICE PACKAGE (SOP) – PAYROLL MANAGEMENT eases the pain and effort of the inescapably time-consuming task of payroll processing through its user-friendly interface and multiple features. The system delivers fast and accurate salary computation, covering all possible overtime rates, commissions, governmentrequired contributions, loan deductions, leave benefits and 13th month pay. It also generates payroll registers, payslips, bank letters and disk transfers to banks in simple and highly efficient ways. Generation of timely tax, SSS, Pag-ibig, corresponding loan reports, as well as maintenance of detailed trail records for leave utilization and loan deductions are fully supported. [UNISTAR 2006]

The developed system has adopted key features such as: fast computing of salary,
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government required contributions, leave benefits and the 13 month pay. Simple Office Package Payroll Management Software

th

Figure 1.2.1.5 Jeonsoft Payroll Suite 2006

The leading payroll processing software in the Philippines. The system automates payroll computation while making recording and retrieval of employee records fast and easy. JeonSoft Payroll Suite 2006 is a Client-Server based Integrated Personnel and Complete Payroll System specifically designed for Philippine use. It is composed of three major modules namely the all rolled into one complete system. To ensure the security maintenance of JeonSoft Payroll System, it is bundled with JADE (Jeonsoft Administrative Enforcer) programmed to protect the security transactions of your system. Users will be asked to enter their login name and password to confirm if they are entitled to access the system. Using JADE, Administrators can also assign a specific module for employees to access since they are only entitled to access modules that are related to their

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work. Its similarity with the developed system is that the system automates payroll Time Attendance System, Payroll System and all computation while making recording and retrieval of employee records fast and easy. ZenHours

Figure 1.2.1.6 ZenHours

ZenHours is the first real fully automated TimeKeeping, Leaves and Overtime tracking and Payroll solution specifically made for the Philippines. Unlike other systems where TimeKeeping, Leaves & Overtime Tracking and Payroll are different individual systems, with ZenHours they're all fully integrated hence no need for manual and repetitive encoding. ZenHours is also managed hence updates for government reports that change regularly are always available. ZenHours was designed and developed by Cr8v Web Solutions, one of the Philippines' top software firms, which means we have no problem fully customizing it and tailor-fitting ZenHours to our clients' needs. Compared

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to our competitors, we did not outsource the development of this system to a third party nor are we just reselling something imported from other countries. The developers had adopted some features of ZenHours such as: tracking of employees' attendance, overtime and leaves. Managers can review, approve or reject overtime and leaves applications and is equipped with validation that will significantly lessen the chance of human error. 1.3 General Objective This study aims to design and develop the Payroll System with Biometrics Technology using Java for Benigno “Ninoy” S. Aquino Highschool that would upgrade the current Biometrics Technology thus enhancing the process of monitoring the Daily Time Record of the Teaching and Non-Teaching staffs of the school. Effective monitoring of the DTR of the employees will be beneficial to the Disbursement Department of the school in preparing the Form 7, a vital requirements of the Regional Office of DepEd for their payroll. 1.3.1 Specific Objectives  To develop a system that does not only stores the time-in and time-out of employees, but also automatically computes for the tardiness. This module will help reduce the workload currently experiencing by the Disbursement Officer in calculating the tardiness of each employee.  To develop a module that will notify the disbursement head if a certain entry is missing in the attendance reducing the need for the logbook for verification.

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This module will help the disbursing office to enforce the use of biometrics to the employees rather than disregarding it because they rely on the logbook for their time-in and time-out. 

To develop a system that will automatically produce a computed form 7 based on the upgraded biometrics’ time in and time out system. This module will save the time and effort of the disbursing assistant who is in charge on computing the Form 7 and minimize the possibility of human

errors given that the data input in the developed system are precise.  To developed a system that stores the necessary files needed during the generation of Form 7. This module will help the disbursing office save time on finding the specific employee file on different folders because these said files will be on the developed system ready to be computed automatically.

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1.3.3.1.1

Scope and Limitations

1.3.3.1 Scope This study is designed to develop the Payroll System with Biometrics Technology using Java for Benigno “Ninoy” S. Aquino Highschool. It covers the time in-time out of the employees through biometrics, specifically through a fingerprint scanner technology. It also covers the process of preparing the Form 7 needed by the DepEd for the staff’s salary distribution. This system will keep the records and easily computes the net pay. GSIS, Philhealth, Personal Economic Resource Allowance. (P.E.R.A)

1.3.3.2 Limitation The proposed system can only be access by an authorized disbursement department employee to maintain the confidentiality. The system will only generate a mock payslip of the employees for it is the DepEd Regional Office that handles that aspect. The system will only compute all the necessary requirements in producing the form 7. The developed system will also be reliable in checking a certain employee’s salary. Even if the developed system uses a fingerprint scanner technology, it will not be able to check on every employee’s working habit and performance. Cash loans will also not be included in the developed system because all cash loans are directly inquired and processed in the regional division office.

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