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Table of Contents T-9 11.2 Journal Entries.................................................................................................................................... 11-7 11.3 Recording Payroll Transactions. ......................................................................................................... 11-8 11.4 Accounting Periods. ......................................................................................................................... 11-11 11.5 Accruals and Reversals...................................................................................................................... 11-11 11.6 Balancing and Reconciling Payroll Accounts. .................................................................................. 11-14 11.6-1 Periodic Balancing and Reconciliation. ............................................................................ 11-15 11.6-2 Payroll Bank Account Reconciliation............................................................................... 11-16 11.7 Financial Statements and Audits...................................................................................................... 11-17 11.7-1 Balance Sheet. .................................................................................................................. 11-17 11.7-2 Income Statement. ........................................................................................................... 11-18 11.7-3 Notes to Financial Statements.......................................................................................... 11-19 11.7-4 Auditing Financial Statements......................................................................................... 11-19 11.8 Internal Controls. ............................................................................................................................. 11-19 11.9 Controlling Check Fraud. ................................................................................................................ 11-24 11.10 Check 21 and Its Impact on Payroll. ................................................................................................ 11-26 11.11 Review Questions and Exercises. ..................................................................................................... 11-27 SECTION 12: PAYROLL SYSTEMS AND TECHNOLOGY 12.1 Payroll System Objectives................................................................................................................... 12-2 12.2 Interfacing and Integration................................................................................................................. 12-3 12.2-1 Interfacing—Working With Other Systems and Departments......................................... 12-3 12.2-2 Integration of Payroll, Benefits, and Human Resource Systems......................................... 12-4 12.3 Hardware and Software Alternatives—Pros and Cons....................................................................... 12-5 12.3-1 Service Providers—Outsourcing the Payroll. ..................................................................... 12-5 12.3-2 In-House Payroll Systems. ................................................................................................. 12-7 12.4 Selecting a Payroll System.................................................................................................................. 12-8 12.4-1 Build a Project Team. ......................................................................................................... 12-9 12.4-2 Analyze What the System Needs to Do........................................................................... 12-10 12.4-3 Prepare a Request for Proposal......................................................................................... 12-11 12.4-4 Select a System................................................................................................................. 12-12 12.4-5 Implement the System. .................................................................................................... 12-14 12.4-6 Evaluate the System’s Performance................................................................................... 12-16 12.5 Controls and Security for the Payroll System................................................................................... 12-17 12.5-1 Putting Controls Into the Process. ................................................................................... 12-17 12.5-2 System Documentation. ................................................................................................... 12-18 12.5-3 Providing Security for the System.................................................................................... 12-20 12.6 Disaster Recovery and Business Continuity Planning...................................................................... 12-21 12.7 Automated Time and Attendance. ................................................................................................... 12-23 The Payroll Source®