A Computerized Payroll System

1. 0 Introduction

1. 1Statement of the Problem

Not so long ago, all payrolls used to be calculated manually without any help from the computer. Professional’s accountants invested a lot of time and energy into keeping track of all employee data, files and information, calculating monthly salaries, benefits and taxes.

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And they did this all by keeping numerous files filled with track records for each and every person employed. Nowadays, however, thing are for more simple than they used to be. Because technology is always dedicated to making thing easier and better, quite a wide variety of computerized payroll system is available to save us from this tedious task. Now instead of keeping dozens of files and spending in less hours calculating, all you have to do is get a payroll software system and let it do the nasty work. The computerized payroll system saves time and money easy to use and practical.

Manual payroll system is performed entirely by hand and can result in payroll errors and usually slow process. Nowadays business establishment on corporation must use modern technologies to make their tasks easier and faster, technologies that will help people to solve complex problems. Businesses needs advance system that saves time and also secure. Most of company now uses computerized payroll system. A computerized payroll system will not only resolve difficult problems but also it will provide fast process and accurate calculation of the salary. 1. 2Current State of the Technology

Transaction processing systems offer enterprises the means to rapidly process transactions to ensure the smooth flow of data and the progression of processes throughout the enterprise. Managing a payroll system manually is a tedious job. Hours worked, taxes, and government deduction are calculated y hand, error in computation can occur as a result. Making sure that each employee is paid accordingly and on time is a management responsibility that should be carefully planned and executed. Failure to manage a payroll effectively may cause many problems for the company and its employees.

It could mean loss of money, integrity, and trust between both parties. Oftentimes, it takes many hours of work and manpower to get the job done. In certain cases, effective payroll management is compromised by the lack of an effective system. Most companies may have enough manpower and resources. However, with an effective information technology, managing a payroll will be simpler, cost-effective, timely and reliable. One of the companies that use manual payroll system is the Arias Garments. It was established last September 18, 1994 at #88 Bargy. Latag, Lipa City, under the management of Mr. Alex Arias together with his wife Mrs.

Anita Carol Katigbak. It started with only forty machines and ten employees. The capital of Arias Garments is Php 500,000. 00. By 1996, Arias Garments became the subcontractor of Champan Garments. Champan Garments produce and transport products like Gap, Banana Republic, Old Navy, Tommy, and Hilfinger. As of now, Arias Garments have 176 machines and 100 employees (40 regular and 60 contractual). 8:00AM is the time-in of employees, 4:00PM is the time out, and they consider 8:15AM as late. Employees who are late or either log-out earlier than 4:00PM will have a deduction on their wages (deduction is 0. 61 per minutes late or under time).

First offense, for late and employees who under time, will be given warning, second and third offense is suspension and fourth offense is termination. Manufacturing is their main business, their product lines are: Jeans, Skirts, and shorts for maternity, infants, and kinds. Their clients are from different countries: Japan, UK, Hongkong, China, and Taiwan. Arias Garments is not allowed to sell or manufacture product here in Philippines, because this is an agreement between Arias and Champan Garments. They also have regular and contractual employee, when it comes to salary it is still the same, Php293. 0 is the salary rate per day. Regular employees have government benefits (SSS, PagIbig, and Phil health). Arias Garments is a minimum wage earner that’s why they are paying the minimum amount on the government deduction. PagIbig deduction is Php100. 00 per month, since weekly is the cut-off period Php100. 00 will be divided by four because there are four weeks in a month; Php25. 00 is the deduction per cut-off period on PagIbig. In PhilHealth, Php50. 00 is the per month, so per cut-off period is Php12. 50. Regarding with SSS deduction the Compliance Officer is provided a table of deduction given by SSS.

Since employees are minimum wage earner they have to pay Php133. 30 month or Php33. 33 per cut-off period. Contractual employees don’t have benefits; it means they don’t have to pay government deduction. Employees of Arias Garments are not paying taxes, because they are minimum wage earner and do not receive allowance from the company, therefore they are zero rated or tax free. Regarding to holiday, employees who work during holiday will have a double pay. Regular employees who worked, one year and above have a vacation leave ( policy regarding to leave olicy is written at the back part at appendix ___? ) They used daily time card to monitor the attendance of employees and every Thursday is their cut-off period. Accounting Process is managed by the Compliance Officer namely, Mrs. Korina Navarro. She manually computes every day the employee’s wages and necessary deductions, she spent three hours a day to finish and update the employee’s wages. By looking through the time card she manages to compute the days worked of 100 employees’s that causes inaccurate and delay computation of the weekly salary.

Reports for SSS, PagIbig, and Phil health will be prepared by the Compliance Officer that consume most of her time in a day. Because of huge number of Arias Garments employees, the Compliance Officer encounter different problem like slow transaction and inaccurate computation of wages and deductions, inaccurate report generation and ineffective creation of pay slip. 1. 3Objectives 1. 3. 1General Problem How to design, develop and improve the current payroll system of Arias Garments? 1. 3. 2Specific Problem •How to add and update the employee’s record faster?

Based on interview the Compliance Officer takes more of her time on adding and updating employee’s record. Because of big number of Arias Garments employee, it causes inaccurate input on adding and updating data. •How to make accurate computations of the employee’s payroll? Based on the interview conducted, the Compliance Officer of Arias Garments computes the employee’s salary includes certain deductions (SSS, Phil Health and PagIbig) and necessary leave, absence, holiday pay, and under time that are carefully considered for the computations of the net pay manually. Exchanging and inaccurate results usually happened.

Arias Garments create their pay slip manually also, in this case the compliance officer has to look at the table all over again to verify each of the employee’s salary and write it down on a pay slip to formalized the wage slow transaction and inaccurate pay slip is the often result. •How to minimize the time preparing the weekly employee reports? Based on observation the compliance officer is the only one who prepares the weekly employee reports that consume most of her time in a day. Arias Garments monitoring system is executed manually, therefore generating reports consume more time. 1. 3. 3General objectives

This study aims to improve the current payroll system of Arias Garments by developing and designing a computerized payroll. 1. 3. 4Specific Objectives Specifically, the study aims: •To develop an Information Module that will contain personal information of employees. This module will improve the procedures of adding and updating files and record of employees of Arias Garments through the use of computerized payroll information module, which will minimize the time in adding and updating processes. •To develop a transaction module that will compute the wages and deductions such as PagIbig, SSS, Phil Health, and absence.

This module will automatically compute necessary government deductions needed in providing weekly wages. This will serve as a guide in computing wages. This will also contain a print-out salary and deductions of the employees. This will automatically print-out the computed salary of employees in a computerized pay slip. •To develop a report generation module, that will generate weekly reports to be use by the Compliance Officer. The proposed system will also contain the report generation module which will offer faster way of creating weekly reports. This module will generate reports easier than Microsoft Excel. . 3. 5Scope and Limitations The system will focus mainly on transaction of calculating employee’s wages by using Microsoft Access. It will guarantee maintenance of employee’s personal records and transaction. The proposed system will be using Microsoft Access. The system has a data base that stores all the employees record needed in payroll computation. This includes the personal data of every employee, government deductions and other deductions. Computation for contractual and regular employees will be separated. The Computerized Payroll System will contain the major following major module: •Information Module

This module contains the personal information about the employees of the Arias Garments. In this module Compliance Officer can add, delete, edit and update easily the information about employees. •Transaction Module This module is for the computation of the employee’s payroll for their weekly wages. Computation on deduction such SSS, PagIbig, PhilHealth, late and under time will automatically computed and deducted in this module. •Report Generation Module This module will generate weekly reports such as employees payslip, SSS, PagIbig, and PhilHealth Contribution. The Compliance Officer can view or print-out the needed reports.

This will help the management in a faster salary distribution for the employees. This study will not involve the use of other electronic devices such as swiping machines, barcode readers, touch screen and programmable keyboard due to the lack of financial capability of the proponents to buy such equipments and Arias Garments does not consider those devices at present time due to their budget allocation. Time-in and time-out of the employees will not be included in the system. Employees will still use the daily time card to monitor their attendance. Compliance Officer will just transfer the employee attendance by typing in to the system.

User name and user password is not provided on the system. Financial calculation is not included in the system; only employees can be calculated in the system. Furthermore, the system would be limited only for creation of pay slips, generation of reports and record keeping. The system will not include accounting process such computation of debit, credit, and cash on hand. The system is designed in such a manner that Compliance Officer with minimal computer knowledge will be able to learn and later master all the procedures provided. Therefore, it will not be necessary to hire additional staff. 2. 0Theoretical Framework 2. Introduction A theoretical framework is a collection of interrelated concepts, like a theory but not necessarily so well worked-out. A theoretical framework guides your research, determining what things you will measure, and what statistical relationships you will look for. Theoretical frameworks are obviously critical in deductive, theory-testing sorts of studies. In those kinds of studies, the theoretical framework must be very specific and well-thought out. Surprisingly, theoretical frameworks are also important in exploratory studies, where you really don't know much about what is going on, and are trying to learn more.

There are two reasons why theoretical frameworks are important here. First, no matter how little you think you know about a topic, and how unbiased you think you are, it is impossible for a human being not to have preconceived notions, even if they are of a very general nature. A theoretical framework is a collection of interrelated concepts, like a theory but not necessarily so well worked-out. A theoretical framework guides your research, determining what things you will measure, and what statistical relationships you will look for. 2. 2Database Management

A Database Management System (DBMS) is a set of computer programs that controls the creation, maintenance, and the use of a database. It allows organizations to place control of database development in the hands of database administrators (DBAs) and other specialists. A DBMS is a system software package that helps the use of integrated collection of data records and files known as databases. It allows different user application programs to easily access the same database. DBMSs may use any of a variety of database models, such as the network model or relational model.

In large systems, a DBMS allows users and other software to store and retrieve data in a structured. 2. 3Information System Information Systems (IS) is an academic/professional discipline bridging the business field and the well-defined computer science field that is evolving toward a new scientific area of study. An information systems discipline therefore is supported by the theoretical foundations of information and computations such that learned scholars have unique opportunities to explore the academics of various business models as well as related algorithmic processes within a computer science discipline. . 4 Transaction Processing System A Transaction Processing System (TPS) is a type of information system that collects, stores, modifies and retrieves the data transactions of an enterprise. A transaction is any event that passes the ACID test in which data is generated or modified before storage in an information system. Transaction processing systems offer enterprises the means to rapidly process transactions to ensure the smooth flow of data and the progression of processes throughout the enterprise.

2. Computer

A computer is a programmable machine designed to sequentially and automatically carry out a sequence of arithmetic or logical operations. The particular sequence of operations can be changed readily, allowing the computer to solve more than one kind of problem.

2. 5. 1Hardware

Computer hardware refers to the physical parts of a computer and related devices. Internal hardware devices include motherboards, hard drives, and RAM. External hardware devices include monitors, keyboards, mice, printers, and scanners.

The internal hardware parts of a computer are often referred to as components, while external hardware devices are usually called peripherals. Together, they all fall under the category of computer hardware. Software, on the other hand, consists of the programs and applications that run on computers. Because software runs on computer hardware, software programs often have system requirements that list the minimum hardware required for the software to run.

2. 5. 2 Software Computer software, or just software, is a collection of computer programs and related data that provide the instructions telling a computer what to do and how to do it.

We can also say software refers to one or more computer programs and data held in the storage of the computer for some purposes. In other words software is a set of programs, procedures, algorithms and its documentation.

2. 5. 3 Microsoft Access Microsoft Access is the database application from the Microsoft Office Suite of applications. It is a powerful personal database and data manipulation tool that is also widely used in many small businesses. Database consists of tables, their relationship to one another, queries, reports, forms. Macros and filters.

2. 5. 4 Microsoft Word

Word includes templates to design documents used routinely in office environments such as sales letters, mailing label formats and invoices. A program to type text.

3. 0 A Computerized Payroll System for Arias Garments

3. 1 Introduction The proposed system will be using Microsoft Access for the database. The system will have a data base that stores all the employee records needed in payroll computation. This includes information of every employee and government deductions. The system have a information, transaction and report generation module. The proposed system is designed only for the use of Arias Garments which is located at #88 Brgy.

Latag, Lipa City. The system would be limited only for the creation of pay slips, generation of reports and record keeping. 3. 2System Design Specification The proposed system is determined to eliminate all the problems encountered in using the manual operations in the payroll system. The primary goal of the proponents is to develop a computerized system that will help the user reduce the burden of time processing of payroll with integrity and accuracy. The proponents used System development Life Cycle, because it is systematic and has an orderly approach in analyzing the projects.

The first step is System Planning, second is system analysis, third is system design, fourth is system implementation and last is system support. The system was developed in order to solve the problems of the current payroll of Arias Garments. System development Life Cycle System Planning The planning phase includes several elements such as identification of objectives, assessment of resources, scanning the environment, determination and evaluation of alternative sources of action toward the achievement of objectives.

The proponents did the initial investigation as what solution is necessary in order to improve the current manual payroll system of the Arias Garments. The proponents gather information through interviews, and observation of the current payroll system of Arias Garments. This study aims to design, develop and improved the current manual payroll system of Arias Garments to lessen the time being consumed in computing salaries and generating all necessary reports. System Analysis The purpose is to analyze the Arias Garments problem or situation and then to define the requirements for new or improved payroll system.

The proponents worked with the Compliance Officer of Arias Garments in order to better understand how they managed their current payroll system and how proponents can provide the best alternative solution. System design The scope of a system design remains the single payroll system application from system analysis. The purposed is to design a computerized technical solution that meets the payroll system requirements as specified in system analysis. Proponents used the best solution that they devised in the system analysis phase. Proponents provide effective input to information like the formula, field name and type.

Proponents used techniques of a good form and screen design. System Implementation The purposed of the system implementation is defined by the technology related components of the payroll system application. The purpose is to construct and or assemble the technical components and deliver the new improved payroll system into operation. The system is carefully tested to make sure that there are no errors. The proponents turn the system design into credible working system using Microsoft Access. System Maintenance The purposed of the system maintenance is to sustain and support the system for the remainder of its useful life.

The proponents will use a proof implementation review process to monitor, evaluate and modify the system as needed. The proponents will keep in touch with the payroll officers for them to communicate with each other about the installed payroll system program. If ever those errors are encountered, the proponents will do all of the necessary corrections the soonest possible time. This phase will continue as long as the system is in use. 3. 3Proposed Data Flow Diagram of Arias Garments The proposed system was developed in order to solve the problems of the current manual payroll of Arias Garments.

The system will monitor the time-in and time-out of the employees and calculate hours worked in payroll transaction. Employee’s records and files will be kept in a secured database for necessary updating and deletion purposes. The system will also generate weekly reports and computerized pay slip for every employee. 3. 4Entity Relationship Diagram Entity Relationship Diagram is use to identify the relationships between each table from database. Each table has a primary key that connect the table to another table to know if it is connected to other tables. 3. Input Specification Data Structure of Database: Personal Data Data Structure of Database: Regular Payroll Data Structure of Database: Formula Regular Payroll Data Structure of Database: Contractual Payroll Data Structure of Database: Formula Contractual Payroll Data Structure of Database: Deductions 3. 6Output Specification Data Structure of Database: Personal Data Data Structure of Database: Regular Payroll Data Structure of Database: Formula Regular Payroll Data Structure of Database: Contractual Payroll Data Structure of Database: Formula Contractual Payroll

Data Structure of Database: Deductions 4. 0Performance Analysis 4. 1Introduction Performance analysis involves gathering formal and informal data to help customers and sponsors define and achieve their goals. Performance analysis uncovers several perspectives on a problem or opportunity, determining any and all drivers towards or barriers to successful performance, and proposing a solution system based on what is discovered. Based on interview and observation the solution for the problem encountered by Arias Garments is to improve their current payroll system. 4. 2Experimental

The experimental method is the only method of research that can truly test hypotheses concerning cause-and-effect relationships. It represents the most valid approach to the solution of educational problems, both practical and theoretical, and to the advancement of education. The proponents use Microsoft Excel to determine the difference with Microsoft Access. Proponents found out that Microsoft Access is easy to use and more advance when it comes to features. By browsing the Microsoft Access proponents became more familiar on it and they can now make a Computerized Payroll System for Arias Garments. 4. 3Data Gathering Procedures and Output

In data gathering, the proponents used different procedures and techniques that became the first touch of defining problems encountered by Arias Garments. The proponents set an interview with the Compliance Officer in order to gather facts. The second technique is observation, as to clearly understand and support the conducted interview. Library and internet is also use. 4. 3. 1Interview Interview is a technique used to gather information about the subject of the study. Relevant set of questions were prepared for the Compliance Officer, Mrs Korina Navarro in order to gather information on how they manage their current Payroll System.

The transcript of interview is on the back page at apendex____? 4. 3. 2Observation Observation is very effective information gathering. In able to understand clearly the problem of the current system or to know what solutions should be made, observation is one technique that should be practiced. Observation is performed by the proponents in order to know and understand the daily transaction of Arias Garments. Based on the observation conducted, computation and deductions are done manually in their current payroll by the Compliance Officer. Often, results are slow transaction and inaccurate computation of salary. 4. 4Research Method

Can be defined as the search for knowledge, or as any systematic investigation, with an open mind, to establish facts, solve new or existing problems, prove new ideas, or develop new theories. 4. 4. 1Internet The proponents used internet because, internet is a global system of interconnected computer networks that use the standard Internet Protocol Suite to serve billions of information. It is a network of networks that consists of millions of private, public, academic, business, and government networks, of local to global scope, that are linked by a broad array of electronic, wireless and optical networking technologies.

Throughout the development of the system and documentation particularly in chapter 2, 3, and 4, the proponents use goggle, yahoo, Wikipedia as search engine for defining terms like theoretical framework, database management, transaction processing system, information system, computer, hardware, software, Microsoft Access and word for chapter 2 and the different phases of system development life cycle for chapter 3. Data gathering, interview, observation, research method, internet and library for chapter 4. The following website that we have research are: References: [http://www. estpricecomputers. co. uk/glossary/transaction-processing-systems. htm] [http://en. wikipedia. org/wiki/Information_system] [http://en. wikipedia. org/wiki/Computer] [http://www. google. com. ph] 4. 3. 2 Library It means the collection itself, the building or room that houses such a collection. The proponents conducted library research at STI College Lipa Library. Information was gathered by the proponents from different thesis about payroll system like “A Computerized Payroll System for the office of the City Veterinarian and Agriculture services and some other books like

Database Processing and MS Office ’97. Screen Shot No. : 1 Screen Name: Welcome Screen Shot No. : 2 Description: Arias Garments Logo’s Screen Shot No. : 3 Description: all modules Screen Shot No. : 4 Description: this is Information form, can add, delete and update employees record. Screen Shot No. : 5 Description: Form for the computation of regular employee’s salary. Screen Shot No. : 6 Description: Form for the computation of contractual employee’s salary Screen Shot No. : 7 Description: Reports Screen Shot No. 8 Description: Payslip ACKNOWLEDGEMENT Words are not enough to express the depth of gratitude for those special people who unselfishly shared their time, helping hands, words of encouragement and most of all love, which contributed to the fulfillment of this endeavor. Coming from our heart with all sincerity we wish to thank the following: Engr. Ramon P. Flores IV, Dean and our instructor in research and development for the concern, comments, helpful advice and encouragement to finish this study.

Arias Garments, especially to Ms. Korina Navarro the Compliance Officer, for allowing us to conduct interview and providing the information and written document for pursuing this study. Ms. Thelma Sarmiento and Ms. Daisy Oracion, IT instructors for their worthy suggestion and sharing knowledge for fulfilment of our system. Mr. Antonio Fernandez BSBM Head, for giving us some suggestion and moral support for the fulfillment of this study. Ms. Isabelita Socias, STI Lipa Librarian for allowing us to use the library. Mr.

Leonardo Babol III, giving us the permission you use the permission STI Computer Laboratory. Mr. Lloyd Wendell Aguilar, for guiding us when we are using computers in the Computer Laboratory. Friends and Classmates, for encouragement and support. Beloved Parents, for their all-out love, concern and understanding, moral and financial support which contributed significantly in the accomplishment and fulfilment of the study. And to Almighty God, for never-ceasing guidance in helping us to overcome all of our day-today difficulties and for not leaving us in time of hardship.

Thank you very much. Proponents: Ms. Arnalyn S. Arellano Ms. Marry Ann A. Adona Ms. Christine Rose R. Arellano BIBLIOGRAPHY Books: [1997]Microsoft Office ‘97 System Technology Institute PHP and SQL Web Development (3rd Edition) Luke Welling and Laura Thomson Unpublished Thesis: [CAV 2004]Vergara, Carmen A. A computerized Payroll System for the Office of the City of Veterinarian and Agriculture March 2004 World Wide Web: Http://www. goggle. com. ph] Http://www. Transaction-processing-system. htm] [Http://www. wikepedia. org/wiki/computer]

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