Establish the payroll system
Submission details Candidate’s name | | Phone no. | | Assessor’s name | | Phone no. | | Assessment site | | Assessment date/s | | Time/s | |
The assessment task is due on the date specified by your assessor. Any variations to this arrangement must be approved in writing by your assessor.
Submit this document with any required evidence attached. See specifications below for details.
Performance objective
The candidate will demonstrate the ability to establish procedures for the management of payroll.
Assessment description
In response to the scenario provided, you will develop a step-by-step plan to establish a payroll system, develop security procedures, establish control measures, and ensure procedures guarantee substantiation of claims for allowances.
Procedure
1. Consider the scenario and task provided. 2. Consider the design of a payroll system to cover organisational and legislative requirements. 3. Prepare a planning document in which you outline steps you would take to establish the payroll system. Your plan must include a step-by-step description of review, design, development and implementation. Include: a. a survey of legal environment b. the development of policies and procedures (refer specifically to those three developed in steps 4–5 of this procedure. c. communication/consultation. 4. Write a policy and procedures document to ensure security of employee payroll information. Include reference to relevant legislation. 5. Write a policy and procedures document to ensure substantiation of claims for allowances. Include reference to relevant legislation. 6. Write a policy and procedures document to safeguard organisational resources. Include reference to relevant legislation or standards. 7. Write a one page reflection on the process of designing the payroll system. Describe how both organisational and legislative requirements are met by each step of your proposed plan. Describe how policy and procedures documents are designed to ensure all legislative and organisational requirements. 8. Submit all documents required in the specifications below to your assessor. Ensure you keep a copy of all work submitted for your records.
Specifications
You must submit: * planning document with steps to establish payroll system * three policy and procedures documents referred to in plan * one page reflection.
Your assessor will be looking for: * literacy skills to write detailed instructions * knowledge of key provisions of relevant legislation from all forms of government, standards, regulations and codes that may affect aspects of business operations, such as: * Australian Taxation Office regulations * antidiscrimination legislation * ethical principles * codes of practice * financial legislation * privacy laws * relevant industrial awards * other relevant government and statutory bodies in relation to payroll * superannuation guarantee knowledge of organisational policies and procedures across the full range of tasks required by payroll processes.
Adjustment for distance-based learners: * no variation of the task is required * documentation can be submitted electronically or posted in the mail.
Scenario: Pitstop Pty Ltd
Pitstop is a privately owned retail and fuel service company that until recently operated four independent service stations/stores in Melbourne’s north. The company has recently expanded to 13 service stations across Victoria.
The owner, chairman and CEO, Jim Murphy, has run the company for the past five years. He has operated service stations for most of the last 25 years and relies on his hands-on approach to operations.
Pitstop stores trade 6 am–11 pm daily. They typically include a vehicle access forecourt with at least six pump stations, a retail shop, a food bar, store manager’s office and stockroom. They sell fuel, oil, gas, supermarket goods, hot pies (heated from frozen on the premises) and cold drinks.
For the financial year 2011–2012, Pitstop is projected to have an annual turnover of $9,000,000 and generate a profit of $3,000,000. Payroll expense is projected to be $3,000,000. The organisation uses a computerised accounting system: MYOB AccountRight.
Pitstop organisational structure
The flagship Pitstop store in Brunswick, Victoria has an attached office space that accommodates head office (the directors, senior management staff and clerical employees).

Task
In the past eight months, Pitstop has raised sufficient finance to buy out the Independent Service Station (ISS) chain of nine stores and rebrand them all as Pitstop service stations. Jim Murphy plans to continue the expansion until the optimum target of 30 services stations is secured for the Victorian market.
Including the retained staff from the buyout stores, Pitstop now has a workforce of approximately 70 employees. The employees come from a wide range of cultural and linguistic backgrounds. A significant proportion has poor English literacy, including poor reading comprehension. Most employees, but not all, have a high-school level of education.
Previously, with less than 20 employees to pay, Jim and his Finance and Operations Manager, Jack Tan, ran a cash-based payroll system for the four stores. Because of expansion plans across Victoria, the payroll system is inadequate and will need to be completely redesigned. Jim has employed you, as an independent contractor, to design a new payroll system for the organisation. He has the following key requirements: * pay, which was weekly, will now be fortnightly * a separate payroll register should be prepared for each of the stores * pay will be checked and reconciled by each store and then rechecked, reconciled, authorised and disbursed by head office * the payroll system in all stores will be identical * the payroll system should be scalable: as new stores are added the payroll system will simply be duplicated * records will be kept at stores and duplicates will stored at head office * all legislative requirements must be met by the new system.
You will need to plan a payroll system to meet Jim’s requirements. Prepare a planning document in which you outline steps you would take to establish the payroll system at Pitstop.
To support your plan, Jim has also asked you to provide samples of three policies and procedures documents: * security of employee payroll information * substantiation of claims for allowances * one other policy and procedures document to support financial control or the safeguarding of resources.
Finally, Jim has asked you to prepare a written document describing how both organisational and all legislative requirements are met by each step of your proposed plan. Describe how policy and procedures documents are designed to ensure legislative and organisational requirements.

A. A policy and procedures document to ensure security and confidentiality of employee payroll information

Security procedures may include:
-------------------------------------------------
 authorised access
-------------------------------------------------
 back-up files
-------------------------------------------------
 computer passwords
-------------------------------------------------
 employees signing for pay
-------------------------------------------------
 ensuring security of passwords and keys
-------------------------------------------------
 keeping payroll documents secure
-------------------------------------------------
 maintaining security and confidentiality of employees' details
-------------------------------------------------
 numbering payroll registers
-------------------------------------------------
 restricting access to electronic files and locking paper-based confidential information
-------------------------------------------------
 separating locations of confidential information
-------------------------------------------------
 storage of information off site
-------------------------------------------------
 supervision of timesheets
- The payroll system at the Pitstop Pty Ltd is the high security level which is only can be access by the authorised access person.

- The back up data of all entry data about the employee will be located in head office for the security procedures.

- The entry data in the computer must be protected by the computer password and it only can be accessed by the authorised person.

- The signing from every employee is very important if the payment is by cash on hand, this case to prevent the misunderstanding of amount or anything about the payment.

- The head office and the store of Pitstop Pty Ltd must ensure the security by password for computer and the the keys for main door and safety boxes.

- The rate of the amount to pay to all employee every week must be saved in payroll documents and it’s very confidential and must be keep securely in the head office.

- All employee in the Pitstop Pty Ltd have to give the details to the company and all of the detail of the employee must be keep maintained securely and confidentially.

- The company should make the payroll register and will make easier with the number of payroll register.

- The confidential data of payroll in electronic files should be placed in restricted area and locked paper-based with confidential information to protect and follow the security procedures. - Confidential information of the detail of the Pitstop Pty Ltd employees must be separated the location, especially about the payroll data entry.

- All papers related to the payroll information should be located in the special storage and off site.

- An authorised person must be supervised of timesheets about all the payroll system for the security procedures.

B. A policy and procedures document to ensure substantiation of claims for allowances

All the substantiation of allowance for claim must be signed and approved by general manager before hand over the account department. The substantiation allowance includes:
Meal entertainment:
The store managers could claim their meal entertainment with the client. The original tax invoice and the description are necessary for submission of claim.
Motor vehicle expenses:
The original receipts of expenses are compulsory for reimbursement. Only the store managers are eligible to make a claim of the pertaining allowance. A log book is to be maintained for each official trip made.

C. A policy and procedures document to safeguard organisational resources. Control measures may include:
-------------------------------------------------
 authorisation requirements
-------------------------------------------------
 dual checking system
-------------------------------------------------
 internal control policies and procedures
-------------------------------------------------
 multiple checks and balances
-------------------------------------------------
 reconciliation of records
-------------------------------------------------
 separation of duties

- Pitstop Pty Ltd safeguard organisation’s financial resources must be controled by the authorized person required to establish control measures of security procedures of the payroll system.

- The security procedures of checking system should be taken in two times by the different level and the authorized person, it’s called by dual checking system.

- The head office in the Pitstop Pty Ltd supposed to check and control the policies and procedures internally, especially in payroll system.

- Every level staff or employee of Pitstop Pty Ltd could do the check and balances with all data, include the report by the authorized person to make a multiple checks and balances.

- The payroll system will be better with the reconciliation method of the record

- All duties in Pitstop Pty Ltd must be separate for the good management, include the financial record and employee detail.

Legislative and organisational requirements may include:
Australian Accounting and Auditing Standards
Australian Auditing Standards establish requirements and provide application and other explanatory material on: the responsibilities of an auditor when engaged to undertake an audit of a financial report, or complete set of financial statements, or other historical financial information; and the form and content of the auditor’s report

Australian Securities and Investments
Commission (ASIC) requirements an independent Australian government body that acts as Australia's corporate regulator. ASIC's role is to enforce and regulate company and financial services laws to protect Australian consumers, investors and creditors. ASIC administers a range of legislation (or relevant parts of Acts), as well as relevant regulations made under it.
Australian Taxation Office regulations
As the Australian Government's principal revenue collection body, the ATO collectsincome tax, Goods & Services Tax (GST) and other federal taxes for the government. The ATO also has responsibility for managing the Australian Business Register, delivering the Higher Education Loan Programme, delivering many Australian Government payments and administering key components of Australia's superannuation system. corporations law The payroll process is according to the employee pay as you go (PAYG) tax withholding. Tax law requires other tax amounts to be withheld from employees, such as for the Medicare levy, or other employer obligations such as payroll tax
Fringe Benefits Tax (FBT)
The fringe benefits tax (FBT) is a tax applied within the Australian tax system by the Australian Taxation Office. The tax is levied on most non-cash benefits that an employer provides "in respect of employment." The tax is levied on the employer, not the employee and will be levied irrespective of whether the benefit is provided directly to the employee or to an associate of the employee.
Higher Education Contribution Scheme (HECS)
The organization provided the Australia’s Higher Education Contribution Scheme (HECS). It is an income contingent loan scheme, in which university students pay back part of the costs of their tuition after their post-university income reaches a certain threshold, is an important policy innovation for the financing of higher education.
Higher Education Loan Programme (HELP)
Australian citizens and in some case of overseas professionals completing bridging studies in order to be accredited -permanent residents are able to obtain interest free loans from the government under the Higher Education Loan Programme (HELP) which replaced the Higher Education Contribution Scheme (HECS). HELP is jointly administered by the Department of Education, Employment and Workplace Relations (DEEWR) and the Australian Taxation Office (ATO). legislation and regulations in relation to superannuation such as the Superannuation
Guarantee (Administration) Act
The organization provided superannuation support for their employees. Employers pay superannuation for their employees into a complying superannuation fund or retirement savings account (RSA). The purpose of superannuation is to make sure as many Australian as possible will have income support when they retire.

organisational policy and procedures for cash handling.
 Pay As You Go (PAYG) tax
 superannuation
 tax file number
As the Australian tax requires, the organisation deduct the prescribed income tax from their employees’ gross pay and remit payment to the ATO on a regular basic. Because the tax is withheld from the employees each time they are paid, it is often referred to as pay as you go withholding tax (or PAYG withholding).
PAYG withholding is just one part of a broader tax approach introduced by the government in 2000 as part of the ‘new tax system’ that included a goods and services tax (GST) and an Australian business number (ABN). The PAYG system replaced eleven other systems and so streamlined the reporting and payment of tax. Superannuation
As a general rule, the superannuation guarantee legislation requires employers to provide superannuation contributions for their employees as a percentage of their base earnings (current at 9%). When an employee starts work, the employer will need to give them a standard choice from to complete. This form can be ordered or downloaded from the ATO website.

Tax file number
All the staff are compulsory to provide their tax file number to the organisation for tax purpose.

D. Establish systems to ensure that statutory obligations are met and records are kept for the period determined by government legislation

Under the Fair Work Act 2009, the employee records must include details required under the Act and be made available for inspection by the employee or their representative.
Once the employee details record is created, the new employee should be given a Tax file number declaration form to complete. The employee is not required by tax law to complete this form, but not doing so will significantly affect the amount of withholding tax that the organisation must withhold if they don’t.
Provision should be made to store employee records for seven years as required under the Fair Work Australian Act and Australian Taxation office (ATO) regulation. Income tax regulations require that organisation keep written records in English, of the wage and tax details for a minimum period of seven years.

Reflection
We have been successful in developing the company payroll and benefit/allowance payment systems. We have developed payroll processing and benefit payment requirements and incorporated these requirements into the payroll system design and implementation. As well we have developed workflows, processes, policies and training for relevant financial services and departmental end user staff.

Reflection of our work in successful steps:

1) We were responsible for the planning and development of payroll and benefit/allowance payment systems which has been successfully applied.

2) We have developed finance requirements, articulated requirements, participated in design sessions, validated system designs, developed testing data and scenarios, participated in testing and ensured that solutions meet the requirements established.

3) Recommended user acceptance.

4) Developed payroll authorization processes reflecting authorization, management, and reporting requirements

5) Developed payroll dictionaries and data sets, ensured consistency among dictionaries and considered impact on reporting requirements.

6) Participated in the design and implementation of Time and Attendance Systems and provided end user input related to Payroll System requirements.
7) Participated in the design and implementation of Staff Scheduling Systems and provided end user input related to Payroll System requirements.
8) Ensured interfacing between payroll system and all other relevant systems or system components
9) Developed training materials and trained staff as required.