Accounting Best Practices, Fifth Edition

17–8. Use Computerized Time Clocks

The single most labor-intensive task in the payroll area is calculating hours worked for hourly employees. To do so, an accounting clerk must collect all the employee time cards for the most recently completed payroll period, manually add up the hours listed on the cards, and research missing hours with supervisors. This is a lengthy process and usually has a very high error rate, due to the large percentage of missing start or stop times on most time cards. The errors are usually found by employees as soon as they are paid, resulting in a loud and (sometimes) boisterous visit to the payroll department, demanding an immediate adjustment to the paid amount with a manual paycheck.

One solution is to install a computerized time clock. This is a clock that requires an employee to “swipe” an employee-specific plastic card through the clock. The card is encoded with an employee-identifying number, using either a bar code or a magnetic stripe. Once the swipe occurs, the clock automatically stores the date and time, and downloads this data upon request to the payroll department’s computer, where special software automatically calculates hours worked and highlights any problems for additional research (such as missed swipes). Many such clocks can be installed throughout a large facility, or at outlying locations, so that employees can conveniently record their time, no matter where they may be. The more advanced clocks also track the time periods when ...