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Payroll Function -- HR or Accounting?
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Payroll Function -- HR or Accounting?
Discuss workforce management, performance management, retention, communication, motivation, contributing to business results and other topics.
I'm familiar with reasons why Payroll should be a part of HR. What are some reasons Payroll should be a part of Accounting. Which works better?
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Forums » Topic Forums » General Forum » Payroll Function -- HR or Accounting?
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Payroll Function -- HR or Accounting?
posted at 2/26/2002 2:22 AM EST
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Posts: 1
First: 2/26/2002 Last: 2/26/2002 |
I've been in payroll for over 20 years working for four different companies paying 1,000 to 36,000 employees and the position has always been within the accounting umbrella. What's true is accounting is only a portion of what payroll has to know and do and once it is set-up in an integrated or automated system, the accounting work is basically done. My experience has shown that because payroll professionals often know the whole picture they are considered the "go to group". Also, because Payroll is the "end of the line" it often shoulders the burden of HR/Benefit and supervisory tasks not performed timely or accurately in order to complete the process on time and accurately. Payroll's most difficult role is to be audited by employees each and every payroll as well as to ensure HR and Benefits and Accounting are performing the tasks within the tax and accounting law. Payroll is a unique department and depending on the size of the organization should actually stand alone or if smaller, be within the HR area. |
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Payroll Function -- HR or Accounting?
posted at 2/26/2002 2:24 AM EST
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Posts: 276
First: 1/29/2002 Last: 4/30/2003 |
I was interested in mtjensen's post, because my experience is exactly the opposite. I do believe that Payroll should report to Accounting, and that a close working relationship must be maintained. Having said that, however, in most of my previous Payroll management positions (OK, bias now revealed), I found that HR just didn't have the same sense of urgency about handling issues related to payroll and getting the information to payroll on time that they needed.
1 thing that changes this dramatically, however, is the implementation of an integrated HR/PR/Benefits system. This forces the timing issue. It is an age-old question that keeps rearing its head, and it appears it will never be resolved to everyone's satisfaction. In reading articles and participating in forums such as this, I have found that most HR folks want Payroll in HR, and most Payroll folks want it in Finance. However, I'm not sure what that reveals about anybody! |
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Payroll Function -- HR or Accounting?
posted at 2/26/2002 2:42 AM EST
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Posts: 1
First: 2/26/2002 Last: 2/26/2002 |
In our Company, it's both. The HR dept. enters the employees and makes the changes to payrates, taxes, deductions, etc. and the Accounting/Finance dept. processes the hours and the payroll. It's a good auditing/accounting practice, check and balance, security measure to split the duties. |
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Payroll Function -- HR or Accounting?
posted at 2/26/2002 3:18 AM EST
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Posts: 1
First: 2/26/2002 Last: 2/26/2002 |
With our organization, payroll used to be part of the Finance group and about 5 years ago it moved to HR. It works SO much better as part of the HR team. We no longer have the same issues of confidentiality surrounding employees' salaries and deductions, insufficient communication of the important stuff, and misunderstanding on the part of payroll of the urgency of some of the compensation issues that HR deals with.
Now the combined team works really well together and we don't have any of the problems that we used to have. We have an integrated HRIS system and we take payroll to the point where it is ready to be interfaced into Finance and then Finance takes it from there. HR reconciles the liability accounts (yes, I have accounting training as well as HR training) but Finance reviews them all to make sure everything is on the up and up -- and this all meets with the auditor's approval. We couldn't ask for a better system! |
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Payroll Function -- HR or Accounting?
posted at 2/26/2002 11:41 AM EST
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Posts: 1
First: 2/26/2002 Last: 2/26/2002 |
I've been with HR for several years and I think that there are certain aspects of payroll that needs to be handled by Accounting and only certain Accounting Staff should be allowed to see it. But most of it should belong to HR as confidentiality really do counts a lot. Among other things, in our company where I belong, HR is responsible for
the updates on laws concerning workforce - tax, labor laws, social security - and we give instructions to Accounting for info or proper action. |
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Payroll Function -- HR or Accounting?
posted at 2/26/2002 5:07 PM EST
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Posts: 6
First: 3/14/2000 Last: 12/7/2004 |
I've seen Payroll in both, and I think it depends on the organization. Do you have an integrated HR/PR system? Is the payroll software part of your Accounting software, or HR? How do you manage payroll budgets? If managers have accountability, it can be easier to provide budget reports through accounting. How do you process payments to benefit providers, garnishments, 401k?
Even if Payroll resides in Accounting, for a good working relationship to exist, it's critical for HR to understand payroll processing. At my last organization, Accounting owned Payroll, but HR was the back-up. |
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Payroll Function -- HR or Accounting?
posted at 2/26/2002 6:22 PM EST
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Posts: 1
First: 2/26/2002 Last: 2/26/2002 |
Just as payment is not part of the Purchasing Department, payroll is not part of HR. Whilst most of the elements that constitute payroll are defined and supplied by HR, (just as payment to vendor/suppliers are defined by the Purchasing department), it does not mean that payroll should belong to HR. Payroll, being just one of a form of payments, is a financial matter to be handled by the Accounting department.
Other requirements such as segregation of duties, cash flow managment, payment handling (check, or autopayment) necessitate the involvement of Accounting. Having said, one must bear in mind the "customer" perspective. They, the employees, are only interested in their pay, be it handled by HR or Accounting. Hence the importance of ensuring the payroll process has all the right party (HR, Accounting, line mangement) in place to ensure the right pay is paid to the right people at the right time for the right amount. In this regards, both HR and Accounting should be held accoutable for payroll, even though payroll might seat within Accounting. The key is to view payroll as part of a Employee Remuneration Process Chain. Isolating payroll as mere HR or Accounting funtion is a recipe for failure. |
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Payroll Function -- HR or Accounting?
posted at 2/28/2002 4:01 AM EST
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Posts: 2
First: 2/28/2002 Last: 4/2/2002 |
We consider payroll an accounting function for all the reasons noted in other replies - and then some!
Any paperwork related to payroll starts in HR and then moves to finance. The checks and balances are critical. |
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Payroll Function -- HR or Accounting?
posted at 2/28/2002 4:09 AM EST
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Posts: 2
First: 2/28/2002 Last: 3/21/2007 |
This is very interesting and timely for me, as in my role as HRMS Manager, I am proposing bringing payroll under HRMS. SO many of the things that are done on the payroll side are a duplication of what has been already done in HR. For example, our payroll department(currently in Finance) keeps separate files for every EE with copies of the PAF (personnel action form) and other tax forms. Why is this necessary when HR already maintans files?
While I agree that there is an aspect of checks and balances in keeping payroll separate from HR, most payroll staff will not/ don't question the actions of HR because most times it is believed that "HR knows what it is doing", so that is a limited benefit at best. So for efficiency, confidentiality, and timeliness, I think that payroll is better served in HR. |
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