Final year project on Payroll System

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301KM Project

Faculty of Computer Science and Information Technology









JULY 2011


301KM Project 2

Declaration of Originality

This project is all my own work and has not been copied in part or in whole from any other source except where duly acknowledged. As such, all use of previously published work (from books, journals, magazines, internet, etc) has been

acknowledged within the main report to an item in the References or Bibliography lists.

I also agree that an electronic copy of this project may be stored and used for the purposes of plagiarism prevention and detection.

Copyright Acknowledgement

I acknowledge that the copyright of this project and report belongs to Kolej Poly-Tech MARA.

Signed: Date:


301KM Project i


This project is about the development of a new computerizing system called Payroll and Profits System for Emasjasa Mechanical and Electrical Engineering Consultant (EJC). It is constructed to solve the problems occur faced from current manual system which is in term of lack of efficiency, mixed up documentation, increase cost, and low level of security. Additionally, it built due to users requirements that included main function of system which is providing automatically calculation of employee net salary and producing automate reporting of company’s profits. Instead of that, this project has simplified employees work process by provide high functionality of computerize system, and hence provided a user driven application for employees interaction and direct communication. Consequently, the methodology approach for this project is through the prototyping model lifecycle which has several stages during development process. In brief, the results of implementing Payroll and Profits system to the company, it has been achieved all the targeted objectives which has impacted the quality of employee’s performance as it systemized the management process and indirectly leading a success in expand and established their business toward global large market.


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Table of Contents

Table of Contents ... ii

Additional Materials on the Accompanying CD ... xii

Acknowledgements ... xiii


Introduction ... 1

1.1 Company Background ... 2

1.1.1 Organizational Mission ... 2

1.1.2 Organizational Strategy ... 2

1.2 Overview of the Project ... 3

1.2.1 Function of System ... 3 1.2.2 Process of system ... 5 1.3 Problem Statement ... 6 1.3.1 Lack of Efficiency ... 6 1.3.2 Mixed up Documentation ... 6 1.3.3 Increase Cost ... 7 1.3.4 Loss of data ... 7

1.3.5 Low Level of Security ... 7

1.4 Project Objectives ... 8

1.4.1 To Simplify User Work Process by provide High Functionality System ... 8

1.4.2 To Improve Security System ... 8

1.4.3 To Provide, Regulate and Automate Reporting Function ... 9

1.4.4 To Provide a User Driven Application for Employees Interaction and Direct Communication ... 9 1.4.5 To Minimize Cost ... 9 1.5 Project Scope ... 10 1.5.1 Administrator ... 10 1.5.2 Employees ... 11 1.6 Conclusion ... 11


Investigation ... 12

2.1 Payroll System Description and Flow ... 12

2.2 Profits and Loss System Description ... 15

2.3 Review the Disadvantages of Current Manual System (File Base System) ... 15


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2.4 Advantages Proposed System (Computerize Payroll and Profits System) ... 17

2.4.1 Automatic Calculations ... 17

2.4.2 Time-keeping Transportation ... 19

2.4.3 Record-keeping ... 19

2.4.4 Back-ups are easy ... 19

2.4.5 Report Generation ... 20

2.4.6 Computerized payroll less time than manual ... 20

2.5 Comparison between Proposed and Existing System (Manual System VS Computerize System) ... 21

2.6 Proposed Payroll and Profits Need To Adapt with Principle of Accounting ... 22

2.7 System Review ClickSoftware Payroll System ... 25

2.8 System Review Hillstone Software ... 26

2.9 System Review Medlin Payroll Software ... 27

2.10 System Review Georgetown Cleaning Service Employee Payroll page ... 28

2.11 Conclusion ... 29


Methodology ... 30

3.1 Development Approach ... 30

3.2 Prototyping Model ... 30

3.2.1 Gather initial Requirement ... 31

3.2.2 Design Prototype ... 32

3.2.3 Specify and Construct Prototype ... 32

3.2.4 Evaluate Prototype and Recommend changes ... 33

3.2.5 Review, Update, and Enhance Prototype... 33

3.2.6 Develop Real Project System ... 34

3.2.7 Perform Testing ... 34

3.2.8 Perform Maintaining ... 35

3.3 Advantages of Prototyping ... 35

3.3.1 Provide Real and Tangible Meaning ... 35

3.3.2 Reduce Time and Cost Of Development ... 35

3.3.3 Developers receive quantifiable user feedback ... 36

3.3.4 Users are Enthusiastic and Result Higher Satisfaction... 36


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Requirements ... 37

4.1 Functional User Requirement ... 37

4.1.1 Provide High functionality of System ... 37

4.1.2 Backup and Recovery ... 37

4.1.3 Control the Data Redundancy ... 38

4.1.4 Increase the Concurrency and Data Shared ... 38

4.1.5 Efficient in Data Access ... 38

4.2 Non-Functional User Requirement ... 39

4.2.1 Software Requirements ... 39

4.2.2 Hardware Requirement ... 40

4.2.3 Security Requirement ... 41

4.2.4 Interface Design Requirement ... 41

4.2.5 Lifecycle Requirement ... 41

4.3 System Tools ... 42

4.3.1 Database Tools ... 42

4.3.2 Interface Design Tools ... 42

4.3.3 Programming Language Tools ... 42

4.4 Economic Requirement ... 43

4.4.1 Tangible Benefits ... 43

4.4.2 Intangible Benefits ... 44

4.4.3 Tangible Cost ... 45

4.4.4 Intangible Cost ... 46

4.5 Operational and Functional Requirement ... 47

4.6 Conclusion ... 48


Data Analysis and Fact Finding ... 49

5.1 Primary Data ... 50 5.1.1 Observation ... 50 5.1.2 Interview ... 51 Interview Analysis ... 52 5.2 Secondary Data ... 54 5.2.1 Online research ... 55

5.2.2 Study Sampling Of Existing Documentation ... 56


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Design ... 58

6.1 Use Case Diagram ... 59

6.2 Entity Relationship Diagram ... 61

6.3 Story Board ... 62

6.4 Interface Design ... 75

6.4.1 Password Database ... 75

6.4.2 Login Form ... 76

6.4.3 Main Menu Form ... 77

6.4.4 Administration Menu Form ... 77

6.4.5 Employee Information Display Form ... 78

6.4.6 Employee Time Job Sheet Form ... 79

6.4.7 Employee Information for Admin Site ... 80

6.4.8 Salary form ... 81

6.4.9 Project Information Form ... 82

6.4.10 Management Report Sort by Projects ... 83

6.4.11 Management Report Sort by Employees... 83

6.4.12 Management Report All Years All Projects ... 84

6.4.13 Forgot Password form ... 84

6.5 Conclusion ... 85


Implementation... 86

7.1 System Implementation ... 86

7.2 Implementation Tools ... 88

7.3 Installation Payroll and Profits System... 89

7.3.1 Installing Microsoft 2010 ... 89

7.3.2 Choose setup icon ... 89

7.3.3 Select Microsoft Access 2010 ... 90

7.3.4 Accepted Term of Agreements ... 90

7.3.5 Choose Install Now ... 91

7.3.6 Progressing Installation ... 91

7.3.7 Complete Installation and Close ... 92

7.3.8 Place Payroll and Profits System Software at Specific Partition in PC ... 92

7.4 Deliverable of implementation phases ... 93

7.5 Conclusion ... 94


Testing ... 95

8.1 Inspections ... 95


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8.3 Desk Checking... 97

8.4 Unit Testing ... 97

8.4.1 Black Box Testing ... 98

8.4.2 White Box Testing ... 98

8.5 Integration Testing ... 99

8.6 Validation Testing ... 100

8.7 Interface Testing ... 100

8.8 The Chosen Testing (Black bock Testing) ... 101

8.9 Conclusion ... 113


Project Management ... 114

9.1 Project Schedule ... 114

9.1.1 Work Breakdown Structure (WBS) ... 115

9.1.2 Gant Chart ... 116

9.2 Risk Management ... 116

9.2.1 Risk identification ... 116

9.2.2 Risk Assessment ... 117 Requirement Change during Development Project ... 117 Time Constrain as Clashing Of Client and Student Schedule ... 118 Technical Failure of device ... 118

9.2.3 Contingency Plan ... 119

9.3 Quality Management ... 120

9.4 Conclusion ... 121


Conclusion ... 122

10.1 Achievements ... 123

10.1.1 Simplified User Work Process by provide High Functionality System ... 123

10.1.2 Improved Security System ... 123

10.1.3 Provided, Regulated and Automated Reporting Function ... 124

10.1.4 Provided a User Driven Application for Employees Interaction and Direct Communication ... 124

10.1.5 Minimized Cost ... 124

10.2 Future Work ... 125

10.2.1 Implement as web based system ... 125

10.2.2 Implement the synchronization system to RFID device system. ... 125

10.2.3 Provide function to apply emergency leave ... 125

10.3 Project Evaluation ... 126


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10.3.2 Efficiency ... 126

10.3.3 Usability ... 127

10.4 Strengths and Weaknesses of the Payroll and Profits System ... 127

10.4.1 Strengthen of the System ... 127 System has Multiple Functions Provided ... 127 Well Organized and Easy To Understand ... 127 Provide Variety Contingency Method ... 128

10.4.2 Weaknesses of the System ... 128 Hard to deal with time attendance ... 128

10.5 Summary ... 128

Appendix A – Checklist for the Client Acceptance Factors………..…. 131

Appendix B – End Unit Test Form……….………..…. 131

Appendix C – User Manual ... 131


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List of Figure

Figure 2.1 Sample of Payroll System Flow (Gandharva K., 2008) ... 12

Figure 2.2 Major Modules of Payroll System (Gandharva K., 2008) ... 13

Figure 2.3 List of Report Available under Various Modules (Gandharva K., 2008) ... 14

Figure 2.4 CLICKSOFTWARE® Payroll System (ClickSoftware, 2007) ... 25

Figure 2.5 Hillstone Payroll Software (Hillstone Software, 2005) ... 26

Figure 2.6 Medlin Payroll Software (Medlin Software, 2007) ... 27

Figure 2.7 Georgetown Cleaning Service Employee Payroll page (Georgtown Cleaning Software, 2007) ... 28

Figure 3.2 Prototyping Model ... 31

Figure 4.1 Tangible Benefits Worksheet ... 43

Figure 4.2 One-Time Cost Worksheet ... 45

Figure 5.1 Sample of Existing Documentation ... 56

Figure 6.1 Domain Use Case Diagrams of Payroll and Profits System for EJC ... 59

Figure 6.2 Entity Relationship Diagram (ERD) of Payroll and Profits System for EJC ... 61

Figure 6.3 Welcome Form ... 62

Figure 6.4 Login Form ... 62

Figure 6.5 Enter Employee ID for Forgot Password ... 63

Figure 6.6 Enter EPF Number for Forgot Password ... 63

Figure 6.7 Forgot Password Form... 63

Figure 6.8 Main Menu Form ... 64

Figure 6.9 Administration Menu Form ... 64

Figure 6.10 Management Report Menu Form ... 65


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Figure 6.12 Employee Information Display Form ... 66

Figure 6.13 Enter Password for Time Job Sheet Form ... 67

Figure 6.14 Employee Time Job Sheet Form ... 67

Figure 6.15 Enter Password for Edit Time Job Sheet Form ... 68

Figure 6.16 Edit Time Job Sheet Form ... 68

Figure 6.17 Employee Information Form ... 69

Figure 6.18 Enter Month/Year for Salary Form ... 70

Figure 6.19 Enter Employee ID for Salary Form... 70

Figure 6.20 Employee Salary Form... 71

Figure 6.21 Project Information Form ... 72

Figure 6.4 Login Form ... 72

Figure 6.22 Enter Year for Management Report sort by Project ... 73

Figure 6.23 Management Report sort by Project ... 73

Figure 6.24 Enter Year for Management Report sort by Employee ... 74

Figure 6.25 Management Report sort by Employee ... 74

Figure 6.26 Database Password ... 75

Figure 6.27 Login Form ... 76

Figure 6.28 Main Menu Form ... 77

Figure 6.28 Administration Menu Form ... 77

Figure 6.29 Employee Information Display Form ... 78

Figure 6.30 Employee Time Job Sheet Form ... 79

Figure 6.30 Employee Information for Admin Site ... 80

Figure 6.31 Employee Salary form ... 81

Figure 6.32 Project Information form ... 82

Figure 6.33 Management Report Sort by Projects ... 83

Figure 6.33 Management Report Sort by Employees ... 83


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Figure 6.35 Forgot Password Page... 84

Figure 7.30 Choose Folder Microsoft Office Professional 2010 ... 89

Figure 7.31 Click “setup” icon ... 89

Figure 7.32 Choose “Microsoft Access 2010” ... 90

Figure 7.33 Accept term of Agreements ... 90

Figure 7.33 Choose “Install Now” Button ... 91

Figure 7.33 Progressing Installation ... 91

Figure 7.34 Complete Installation ... 92

Figure 7.35 Place Software at specific partition in PC ... 92


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List of Table

Table 4.1 Minimum Hardware Requirement ... 40

Table 5.1 Interview Analysis ... 52

Table 7.1 Deliverable of implementation phases ... 93

Table 8.1 Welcome Form Testing ... 101

Table 8.2 Login Form Testing ... 101

Table 8.3 Main Menu Form Testing ... 102

Table 8.4 Administration Menu Form Testing... 103

Table 8.5 Time Job Sheet Form Testing ... 104

Table 8.6 Project Information Form Testing ... 107

Table 8.7 Employee Information Form Testing ... 109

Table 8.8 Employee Salary Form Testing ... 111

Table 8.9 Management Report Testing ... 112


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Additional Materials on the Accompanying CD

1. Presentation Slide 2. Documentation

3. Payroll and Profits System (Software) 4. Test Material

5. Sampling Existing current Documentation 6. Gant Chart (project Planning)


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First and foremost, thanks to Almighty God for giving me His blessings to complete this final year project. I would like to acknowledge and special thanks to Miss Noor Liza Ali as my supervisor and cornerstone who contributed her time in giving comments, ideas, giving efforts in pleasantly and efficiently for her guidelines and expertise which enable me to construct the development of this final project.

In particular, we would also like to acknowledge the contribution of Madam Fadhilah Rentah as my second assessor who oversaw the grant and recognized the importance of adding the business development voice to my understanding and define the quality project creation.

Instead of that, I am grateful to workforce of Emasjasa Mechanical and Electrical Engineering Consultant, especially Mr. Saidun Sumadi as Manager of company as individuals from the organization who agreed to be interviewed for this report, Rozliani Romly as Human Resource officer of company for their generous support and provided useful feedback on early drafts of the introduction and framework for project development.

Additionally, I would like to express gratitude to my family especially to my parents for their understandings and supports in completing this final year project. I am also appreciating to the numerous colleagues and others who involve directly or indirectly in developing the final year project. Consequently, while they are too numerous to thank individually, this report would not be possible without their helps of the particular that mentioned above, and hence may face with many difficulties while doing and accomplished this final project.


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The project is about developing the new computerize system for Emasjasa Mechanical and Electrical Engineering Consultant which is “Payroll and Profit System”. The key issues in designing the new computerize system were identified and analyzed. The main function would provide a single interface for useful information and knowledge flow, work procedures, policies and departmental updates. In addition, recommendations were also be made for the development and launch phases.

For develop the Payroll and Profits System, the literature review of this project is one of the most important part which is it consisting of hardware and software, chosen option, and the example of the system. In term of the current hardware that use by the company, it is need to be upgrade by the developer because the specification of current company use is too low in order to support the propose system. The hardware need to be upgrade is hard disk, RAM, processor, motherboard, operating system, Network operating system, network card, and video card. In addition, the software that needs to add such as antivirus, Microsoft Office 2010, and others.

Other than that, the important part of literature review need to be considered is the list of option available is based on the user requirements which is STAND ALONE SYSTEM, and what the user needs for the new computerized and stand-alone system that wants to develop is a system which is an easy to use which means the system has the highest of function that provided and easy to understands the flow of the system with correct process and the user interface of the system. Besides that, in the literature review also has identified the best example of the other system as references to develop this propose system which is “Payroll and Profit System”.


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Company Background

Emasjasa Mechanical and Electrical Engineering Consultant (EJC) were established in 29 Nov 2006 by the owner Mohd. Saidun Sumadi at Taman Sri Putra, Johor Bahru. Today a company employing over 20 staffs and involve actively in medium and large size of engineering projects involve actively in medium and large size projects. Their engineers have wide experiences in various types of buildings including:

 Onshore

 Petrochemical Plant,

 Ship And

 Offshore Platforms and others.

Since 2006 until currently, EJC involved actively in 83 projects such IPD Utara JB, and FAMA projects. EJC are also providing Specialist service in:

 Information and Communication Technology System (ICT) design

 Explosion proof HVAC equipment’s design such as Air Handling Unit, Condensing Unit, Chiller, etc.

1.1.1 Organizational Mission

 Maintaining the comfort ability and the stability.

 Provide the higher system that make easy to company to achieve profits

 Make sure the customer get the higher conducive

 Provide a quality specification of services and good management for the customer.

1.1.2 Organizational Strategy

 Improve the sales and marketing of the company

 Analyze the requirement of the staff

 Surveying the staff’s work periodically


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Overview of the Project

Overview of the system will briefly describe about the project of developing Payroll and Profits System which is in term of the function of the system and the detail about the process that involve in the new proposing system. There are about seven functions provide by the developer and six process that involve in this system.

1.2.1 Function of System

For the proposed system, the name project given is “Payroll and Profit System” that will implement at EJC. This proposed system has two main functions in term of provide the computerize system that can calculate the payroll and indirectly calculate the profits of company from time to time follow the standard of the principle accounting such as follow the Financial Reporting Standard (FRS). Therefore, the report that will produce is more accurate and easy to measure the profits of the company. In order to calculate the payroll and profits of company, as employees, they need to key in their daily basis time job sheet that consist their working time in and out and also the hour that they has been spent for each projects that involved by company.

The new system will organize list by saving it into only one place and no more using files. No more hassle trying to find the file needed. With just a simple step, everything is in order and the files are well organized and easy to be found. By using the database system, it can eliminate cost by saving the information directly to the computers and no more needed for Photostat paper. There are many functions that are providing by this system to users. The function of the Payroll and Profit System which are the system allow user to key in the data and save the projects details and their time job sheet that consist in the company for future use in the database (DBMS). The Payroll and Profit System provide function in term of update, delete, insert, save backup and recovery.


301KM Project Page 4 of 144 Whenever the data is want to be update in term of insert new data, delete, or change the old data, the user just need to update once at a time, and no need to update for another file, because the system have the data redundancy. A recovery control system, which is restores the database to a previous consistent state following a hardware or software failure. By eliminating or controlling the redundancy, it is reducing the risk of inconsistencies occurring. If a data item is stored only once in the database, any update to its value has to be perform only once and the new value is available immediately to all users. If a data item is stored more than once and the system is aware of this, this system can ensure that all copies of the item are keep consistent.

Furthermore, the system also has backup and recovery for this system. By develop this system; it will fulfill the user requirement which can have the backup and recovery to the data that save in the system. Everything that user do such as update, delete or add, it will save and automatically have backup. Whenever the system is corrupted or server down, the data is still exist at the backup and recovery of the system. Moreover, the system also allow user to access or shared the data from computer, to another computer via intranet which is Local Area Network (LAN). This system provides information needed for each end user’s application by using application program that share the data in common databases. This system provides the user to share data with another user at the simultaneously with the same information. It can save their time and make fast for user to get the information that they want. For example, the data that need by the management, they just only access that file to the employee’s computer.

Other than that, the function that this Payroll and Profit System provided is the function of searching or find for the data that exist. Whenever the user needs to find the data of employees and projects, they can find with easier, faster and efficient. They just only need to press the no id of employee which is primary key in order to identify all the data that save before. From that, it shown that the database provides variety of techniques to store and retrieve data efficiently. There are many techniques are provided to user to get their objective achieves.


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1.2.2 Process of system


: The system will allow user to insert the new employee’s and project’s details with required the form to fill. The system will receive and hold the data in the database. The user can insert the new data to the system.


: The process of save is provided by the system in order to do any process before and future use. It will save the data that user enter if they click the button save, and it will work.


: The user can update any event that user do in order to access by all user. If the user wants to change the data, the system will eliminate the old data and replace with the new data.


: The process of delete can do by this system in order to discard the old details that user want to replace it.


: The system can do the backup in order to cover all the data that save in the database. If any of the file is corrupted, the data didn’t lost because is still exist at the backup file

Security : The system has the security in order to avoid from

unauthorized user that want to access the Payroll and Profits System


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Problem Statement

In order to develop the project, developer has determine the problem statement from the current using system which is in term of lack efficiency, increase cost, mixed up documentation, loss of data and low level of security. This step of determining problem statement is very important in order to state the objective of the project.

1.3.1 Lack of Efficiency

In the current system, there is more lack of efficiency in term of current manual system uses which is key in the attendance through log book and calculates the staff’s salary with manually. It exposed with easily for them to make mistake and that is show how lack current system and problem occur from using the current system. The users need the project because of to improve the efficiency and accuracy of their work. That is because the current system that they use before is manual and they need the computerize system in order to make their work more efficient and accurate. When they calculate the payroll and the profit of the company by manually, the possibility to make mistake is high rather than implement the propose project which is computerize system. It is because the computerize system will provide function of automatically calculate the payroll and profits of the company follow the fix calculation which is matching the principle of accounting.

1.3.2 Mixed up Documentation

Other than that, there is need for this project because there are some problems in this company when using file based system. The first problem is mixed up documentation. After employee have given back the form that have been fill up with the details of the data, the form are kept in one place before handed to the technician. In the future, if anything happens and the form is needed for inspection, employee must look back in the file and search for the file. The document will be all mixed up and this will burden the user. Hence, it is difficult for staff to make the annual report base on the mixed up documentation and the data may not accurate.


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1.3.3 Increase Cost

Additionally, user need this project because of the lack of current system which is file-based system need lot of space and the paper usage is important. A lot of form is need to use and all these forms are kept in file and all these file are kept in cabinet. From month to month, years to years the file is increase and more cabinet is needed. This cost of space for new cabinet in the office which is limited spaces. It is difficult for employee to search the old files in term of checking and updating. It also can cause slow to find the data. Using filing system, the company needs to buy many file to store the data. If the cabinet is full, the company needs to buy the new cabinet. So, company need to spend much money to buy file and cabinet. When using the system, all the data can stored in one big database. So, company no need to buy many file and new cabinet to store all the data. Other than that, the current system use many paper and need to keep it in cabinet. So every year this company needs to spend their budget to buy papers to use for resource management.

1.3.4 Loss of data

Moreover, other problem occurs during using the current system use by company is it makes the loss of data. All the information about the equipment has been lost or miss place the record. In this case, all the important data has lost because of the current system don’t have any backup. It is difficult for employee to find the lost record again. The system without database will cause the entire data store with unsystematic ways, and this situation will be occur many problem such as difficult to find data and maintain all the data.

1.3.5 Low Level of Security

Without computerized system, there are lack of security for the data that stored by the company. This because any authorized can access data more easily rather than if there any computerized system with security was use by the company. An authorize user also can easily stole the file based from the rack and duplicate it for their needed.


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Project Objectives

There are several project objective are determine during development of project due to the problem statement stated which is in term of to simplify user work process by provide high functionality system, to provide, regulate and automate reporting function, to improve security system, to provide user driven application for employees interaction and direct communication and to minimize cost.

1.4.1 To Simplify User Work Process by provide High Functionality


The main direct users taken into consideration in this report were the administration employees of from various units at this company. Out of all the direct and indirect users targeted as stakeholders for the system, it was concluded that admin support employees would utilize and reduce their work time during accomplish the tasks given. As a result of this time constraint, it was ideal to have most tasks simplified the work process. The objective of project is to fulfill the needed of the customer by provide high functionality in order to accomplish the daily task which is the proposed computerize system are provide with variety of function in term of the user can update, delete, add and have the own fix calculation of payroll and profit matching on the principle of accounting in order to ensure the accuracy and efficiency of work is always be maintain.

1.4.2 To Improve Security System

The project objective is to improve security of the company’s system by replace the current system. The new system are prevents unauthorized users from accessing the database. Without suitable security measures, integration makes the data more vulnerable than file-based systems. The access that an authorize user is allow o the data may be restricted


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1.4.3 To Provide, Regulate and Automate Reporting Function

This was the main objective and all the previous components in the work breakdown structure led to the produce the annual accurate report and recommendations were also made for the further work required. In addition, regulating and automating tasks was established as an objective with the aim to also simplify to user work process. It would give those individuals with the authority on decision making; quick and easy access to data and information in one reliable and secure source. Rather than having data being manually compiled in separate spreadsheets for each unit; collated reports across units can be graphed giving visual enhancements for easy use, analysis and detail breakdown and easy make comparison.

1.4.4 To Provide a User Driven Application for Employees Interaction

and Direct Communication

One of the key goals of EJC is to facilitate an effective communication strategy; both internally amongst staff and externally with direct customers and those that provide indirect services. These are run independently by a unit manager though supervised by area managers and those higher staff through the organization hierarchy. The main communication mediums for all staff working at each unit are through email, phone, fax and internal post. Therefore, by linking all units via an intranet system which is proposed system (Payroll and Profits System) would allow for a quicker and more efficient means of communication.

1.4.5 To Minimize Cost

Finally is the new project’s objective is saving cost. Using filing system, the company needs to buy many file to store the data. If the cabinet is full, the company needs to buy the new cabinet. So, company need to spend much money to buy file and cabinet. When using the system, all the data can stored in one big database. So, company no need to buy many file and new cabinet to store all the data.


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Project Scope

There are two main groups of users that involve in the proposed Payroll and Profit System for Mechanical and Electrical Engineering Consultant, Johor Bahru which is employees and administrator in order to keep update and save all information in database to be calculate automatically the payroll and profit by computerize, not in manual filing.

1.5.1 Administrator

For administrator, it divides into two users in term of manager and Human Resources Employee because of they have same job functionality of the system.

For manager, the needs towards the system are to view the report of the Payroll and Profit System by daily, monthly and yearly. Based on the report, manager can measure either the company achieve the profits or have lose base on the time job sheet that the employees have been key in into the database. If there is any lose regarding the lateness of employee accomplish the projects, it can be improve and avoid from it happened, manager must take immediate action.

In addition, instead of manager as user of the system can maintain the information of the employee and projects, the administrator also determined as user of the system which is Human Resources Employee also can maintain and update all that information. It is means that human resources employee have the same scope functionality of system with the manager which can update and maintain all projects details in the database. Otherwise, the administration also can maintain the information of the projects that involve by the company, the employees such as their details particular, medical certificate, and others claim of allowance. Therefore, the HR’s employee also can automatically produce the management report and the entire employee’s salary of the company.


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1.5.2 Employees

In this system, the employee will key in their time job sheet that consist of their normal and OT time working in and out of the office on daily basis. Instead of employee to key in their working in and out time, they also need the system to key their total hour that they have been spent their time or hour for each projects that company have been involved.



As a conclusion, there are several objective determined due to problem statement which is to develop the new computerize system named as Payroll and Profits System for EJC which will provide many function in order to eliminate the current problem that indirectly can improve the work performance of employees.

The term 'payroll' encompasses every employee of a company who receives a regular wage or other compensation. Some employees may be paid a steady salary while others are paid for hours worked or the number of items produced. All of these different payment methods are calculated by a payroll specialist and the appropriate pay checks are issued. Companies often use objective measuring tools such as timecards or timesheets completed by supervisors to determine the total amount of payroll due each pay period (Michael P. and Lindsay D., 2003).

Fast and accurate payroll processing is essential in any organization. The payroll software module provides a fully functional payroll processing and management system, integrated with the human resource and time and attendance software modules allowing single data entry (Kevin L., 2011).


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The literary review looks at the main theory of determine payroll and profits through available development models. It is also review about the existing manual system that use by the company which is file base system, reviewing the proposed system also comparison between file based system and computerize system. Furthermore, through organizational background research and user requirement analysis, the onset of various new issues to resolve were identified, also the database development approach was identified and the aspects revolving the advantages and disadvantages have also been explored.


Payroll System Description and Flow

Payroll system is the heart of any Human Resource System of an Organization. The solution has to take care of calculation of salary as per rules of the Company, Income-Tax calculation and various deductions to be done from salary including statutory deductions like Income Tax and Provident Fund deductions. It has to generate pay-slip, cheque summary and MIS reports (Gandharva K., 2008).


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Profits and Loss System Description

The free market economy is a profit and loss system. Typically, profits are emphasized but it should be understood that losses are equally necessary for an efficient economy. The nature of profits is sometimes misconstrued by the general public. Profits are not an excess charge or an act of meanness by firms.

Profits are a reward to the capitalist-entrepreneur for creating value. To understand this we must first understand the nature of exchange. When two parties trade they do so because they expect to receive something of greater value than that which they surrender; otherwise they would not waste their time engaging in exchanges (Jim C., 1997)


Review the Disadvantages of Current Manual System

(File Base System)

As stated above, the current system that has been use by the EJC is manual system. From the current environment business process, the manual payroll system requires payroll processing to be done completely by hand. Therefore, time card, wages and payroll tax computations; wage garnishments; and voluntary deductions are done by manually.

Additionally, employee’s time sheet and wage calculations, payroll verifications, check printing, and tax computations and filings are all done by hand and all payroll errors are corrected manually as well, resulting in a tedious task it resulted the greatest disadvantage of manual payroll systems is their propensity for errors with so many calculations being performed by hand, it can be quite easy to make mistakes and doubly hard to correct them (Michael H., 2011).

Furthermore, pay checks and pay stubs are produces handwritten or printed on a typewriter. It is resulted the main disadvantage with this system is its high room for error. The more manual computations the payroll representative has to make, the more errors that staff to make. (Natalie G., 2011).


301KM Project Page 16 of 144 In fact, it is very easy to make mistakes when processing payroll manually, and the penalty for mistakes, especially mistakes during producing the taxing, can be very costly. There are at least free payroll templates out there, but it still difficult to do manual payroll processing. In addition, the disadvantage is that whatever staffs save on start-up costs will probably be eaten up by the amount of time it takes to process the payrolls of whole employees in company.

Besides that, it can cause time-consuming because to ensure the payroll is accurate, staffs has to triple-check the data before printing checks. Even then, it is also still have a possibility to miss errors. In addition, paper filing is required with this system, which can create clutter, and if the payroll representative does not understand how to calculate payroll taxes manually, erroneous tax withholding, reporting and payment occur. Hence, this can result in penalties from federal and state tax agencies (Natalie G., 2011).

A manual payroll system is performed entirely by hand and a computerized payroll system allows a company to process its payroll via dedicated payroll software. In addition, a manual system can result in payroll errors and is usually a slow, laborious process; a computerized system helps to reduce errors and speeds up the process.

In conclusion, the manual payroll system takes up valuable time, resources and money. So instead of wasting valuable time with the tedious accounting tasks, let implement the proposed computerize payroll and profits system as the software have variety of function such as calculate the pay checks, while work on developing the business, increasing production and revenue.


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Advantages Proposed System (Computerize Payroll

and Profits System)

Due to the increasing demands and technology today, computerized payroll software has been made to accommodate such responsibilities. Of course, every employee needs to be compensated for the services he or she provides, in order to do this, every employer should have his or her own payroll system for their company.

A computerized payroll system is a typically used by medium to large scale businesses process. It saves a lot of time and decreases the chances of generating errors and of course, as an employer, they wouldn't want to overpay. By this kind of software, user or employee can input all the payroll information and run year-end reporting quickly and accurately. It also archives pay slips and annual reports in case when going to need them later. An automated payroll system enables the employer to process its payroll through a computerized system. Meanwhile, a manual payroll system requires that the payroll be processed by hand and is therefore a considerably slower procedure than an automated system. The former makes payroll processing simpler, and reduces errors and there many advantages of using the computerize Payroll system.

2.4.1 Automatic Calculations

The automated payroll system uses payroll software to compute all wages. Therefore, the result depends on the accuracy of the input. Thus, if a terminated employee is due severance pay but the payroll representative neglects to make the entry, the system will not pay it. Typically, the system is reliable so long as the entries are correct. The automated system performs all types of payments: hourly, overtime, double-time, salaries, commissions, bonuses, pay raises, retroactive pay, wage deductions, auto payments and tuition reimbursements. Notably, the automated system eliminates manual paycheck writing. The system automatically generates paychecks and stubs and enables direct deposit (Natalie G., 2011).


301KM Project Page 18 of 144 The most complicated area of payroll is working out the holiday pays such as annual leave payments. Many get it wrong even using a computerized system! Again, provided the setup is correct, processing holiday pays is a walk in the park compared to working them out (Robert S., 2011).

If employee time is imported into the computerized payroll system, the latter rounds the employee time up and down appropriately, such as to the nearest quarter hour. It can calculates the total hours worked and to be paid. This is saves on time spent manually calculating the hours and reduces errors. Furthermore, if the payroll person enters the hours into the system herself, it calculates the wages automatically, based on her input. The system will calculates all pay frequencies, such as weekly, and semimonthly

In addition, salary and wage deductions are a necessary part of payroll processing and the employer must take mandatory withholding from employee paychecks, including federal income tax, Social Security tax, Medicare tax and usually state income tax. These all taxes can be time-consuming and perplexing to compute manually.

In fact, a number of rules are attached to withholding tax calculations. By an automated payroll system, the software has the tax rates hard-coded in the system. It will calculates the withholding tax for each employee based on the withholding conditions data input. Therefore, this reduces the likelihood of payroll tax errors, which can result in fees from the IRS and the state taxation agency (Natalie G., 2011).

Besides that, a computerized payroll system can automatically calculates employee statutory deductions, such as taxes and wage garnishments, and voluntary deductions, such as parking fees, contributions and medical benefits. The payroll person simply enters the data upon which the deductions are based, such as form information for federal income tax withholding. Hence, by implement computerize payroll software, it integrated to accounting which is finalizes a pay and your general ledger & financial reports are up to date. (Robert S., 2011).


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2.4.2 Time-keeping Transportation

Usually, hourly workers are paid according to hours worked during the pay period and commonly the employer uses a time-keeping system to track hours and pay hourly employees accordingly. It is critical, that each employee’s time is computed accurately. Many employers use a time clock to track work hours. A manual payroll system requires computing the time clock data by hand and this will increases the likelihood of mistakes. Meanwhile, the automated time-keeping system allows the employer to import time clock data into payroll software. Commonly, the employee uses a swipe card or badge, or the hand prints or fingerprint method, to clock in and out. Once the entries are transported into the payroll software, the software computes the time worked and all the payroll staff member has to do is ensure the time is transported appropriately and makes the necessary edits.

2.4.3 Record-keeping

The IRS requires employers are to keep employment tax records for a minimum of four years. Furthermore, the U.S. Department of Labor requires payroll records to be kept for at least three years. The manual system requires filing the necessary payroll data by hand, which consumes time and increases the clutter and Payroll software generates and stores payroll and employment tax data. (Natalie G., 2011).

In fact, employee no need to look up the tax tables as the programmed contains the rates for PAYE, staff loans and KiwiSaver and the program also calculates any tax credits which from IRD to employer.

2.4.4 Back-ups are easy

It is easy to back up the payroll file for safe keeping. Paper based systems are not backed up, so if the pay book was lost or destroyed then the firm could face big problems (Robert S., 2011).


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2.4.5 Report Generation

A computerized payroll system generates and prints payroll reports. If you want to double-check the payroll before printing paychecks/pay stubs, simply reference the corresponding reports. Furthermore, the U.S. Department of Labor requires employers to retain payroll records for at least three years and a computerized system enables hard-copy printing of payroll registers pertaining to each pay period. It also saves the information in the system indefinitely. In addition, the system generates tax reports to ensure payroll tax compliance. This includes quarterly and annual wage reporting and generating employee form and if a related department such as accounting handles the company's payroll tax and reconciliation duties, print the necessary reports the department needs via the computerized system. Furthermore, the system will tracks benefit days, such as vacation and personal time, taken and paid.

(Natalie G.,


Moreover, any payroll program should come with a range of management reports such as costing reports so management can see wage costs over different areas of the business. ACC levy reports, sick leave, annual leave reports and others can be produced. Moreover, the pay slips printed and contain more information (leave due and leave accrued) than handwritten pay slips which relates to happier employees.

2.4.6 Computerized payroll less time than manual

Once a payroll system is set up, the time taken to process a pay is less. You set up ‘standard’ pays for people so that all allowances and deductions are processed without one thinking about it. Time is saved preparing pays and running the payroll so the employer saves money. All payroll records are held in one central place on a hard drive although it is still necessary to keep leave requests, printed pay summaries and copies of IRD reports (Robert S., 2011).


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Comparison between Proposed and Existing System

(Manual System VS Computerize System)

Not so long ago, all payrolls used to be calculated manually, without any help from a computer. The Professional accountants invested a lot of time and energy into keeping track of all employee data, files and information, calculating monthly salaries, hourly remunerations, bonuses, sick leaves, benefits, taxes, deductions and they did this all by keeping numerous files filled with track records for each and every person employed.

Nowadays, however, thing are far more simple than they used to be because technology is always dedicated to making things easier and better, quite a wide variety of computerized payroll systems is available to save us from this tedious task. Furthermore, instead of keeping dozens of files and spending endless hours calculating, all you have to do is get a payroll software system and let it do all the nasty work.

It is really bares no comparison which is a manual payroll system means doing everything by hand, while a computerized one will enable its users to store unlimited data, keeping track of everything. While with a manual payroll system would have to keep track of all employees' time by hand, with payroll software you can automatically transfer all punches or swipes directly into the system, which will store them instantly.

Moreover, it can even separate regular work hours from overtime, and calculate the different remunerations according to set parameters and if human error sneaks in even with the most organized manual payroll system, computerized payroll software will provide accurate calculations regardless of the amount of data stored. (Adrian F. Alexa, 2011)


301KM Project Page 22 of 144 The computerized payroll software systems save time and money, they're very easy to use and they're also very practical. All programs, however, include essential features for storing employee information, files and track records, and will enable authorized users to enter, view or change information anytime.

The basic features include paycheck processing, direct deposit options, payroll reports, tax reports, deductions, quarterly and annual ware reports and many others. Furthermore, while with a manual payroll system you have to do everything yourself, a computerized payroll software will calculate automatically all pay frequencies, employee statutory deductions, 401k contributions, bonuses, medical benefits etc. It basically, all have to do is enter all the data upon which the deductions are based, and the software will handle everything else (Adrian F. Alexa, 2011).


Proposed Payroll and Profits Need To Adapt with

Principle of Accounting

In order to develop the new propose Payroll and Profits System for EJC, it needs to consider and concern about to matching the new system with the principle of accounting in order to ensure the accuracy of the system. It will be helpful to recall the matching principle of accounting and this principle will guide us to better understand how payroll and fringe benefits are reported on financial statements which are a company need to follow the accrual method of accounting.

The matching principle requires a company to match expenses to the accounting period in which the related revenues are reported and if a direct connection between revenues and an expense does not exist, then the expense should appear on the income statement for the accounting period in which it was incurred. In fact, the expenses are often incurred or occur in a different accounting period than when they are paid.


301KM Project Page 23 of 144 The below are three payroll examples to illustrate this point:

1. A company employs a staff to work a total of five days—from December 26 through December 30, 2010. On December 30 the staff submits her time card. The company issues her payroll check on the next scheduled payday, January 5, 2011.

Even though the check is dated January 5, 2011, the matching principle requires that the company report the expense and the liability in December 2010 when the work was performed (and the company incurred the liability). Because the staff was only employed for the last five days of December, the company would not have any wage or fringe benefits expense for her during January. The paycheck issued on January 5 merely reduces the company's liabilities and cash (Harold A., 2011).

2. Let's assume that a company gives its sales manager an annual bonus of 1% of sales, to be paid on January 15, 2011. The bonus amount is calculated by multiplying the sales from January 1 through December 31, 2010 times 1%.

The matching principle requires that the company report 1% of sales as a Bonus Expense on its income statement (and a liability for the total amount owed must be reported on its balance sheet) in every accounting period in which sales occurred in 2010. If the company violates the matching principle by ignoring the bonus expense throughout the year 2010 (when sales actually occurred) and reports the entire bonus amount as an expense for just one day (January 15, 2011), every income statement pertinent to 2010 will report too much net income and the income statement that includes January 15, 2011 will report too little net income. The matching principle requires that the bonus expense pertinent to the 2010 sales be matched with the 2010 sales on the 2010 income statement (Harold A., 2011).


301KM Project Page 24 of 144 3. A company has a vacation plan that will provide two weeks of vacation in

the year 2011 if the employee worked the entire year of 2010. In the year 2010 (when the employee is working) the company reports the vacation expense on its 2010 income statement. The company's December 31, 2010 balance sheet will report a current liability for the two weeks of vacation pay that was earned by each employee but not yet taken. In 2011 (when employees take the vacations that were earned and expensed in 2010), the company will reduce its cash and its vacation liability (Harold A., 2011).

As state above about accounting for payroll and fringe benefits, keep the matching principle in mind. As the above examples show, the date on which a company pays wages or fringe benefits is not necessarily the date on which the company reports the expense on its financial statements and it is very important to consider and matching the principle of accounting during develop the new propose Payroll and Profits computerize system. Therefore, Payroll and Profits System is responsible for the recording of payroll data, including adjustments and supplements, into accordance with laws and regulations as applicable;

i. Pay the net pay due, by weekly, by electronic funds transfer (direct deposit) to the employee’s financial institutions;

ii. Promptly make payment in the proper amount to all persons entitled to be paid, in compliance with applicable laws, regulations, policies, and legal decisions; Prepare adequate and reliable payroll records;

iii. Promptly record accounting entries for the disposition of all authorized deductions from gross pay;

iv. Maintain adequate control over, and provide adequate retention and disposition of, all payroll related documents;

v. Maintain individual pay records to show gross compensation including allowances by type and amount, deductions including allotments by type and account, and net pay for each period; and Review payroll operations continually and adjust them to be as efficient, effective, and economical as possible, and ensure that payroll systems are in accordance with all legal requirements. (Michael C. Kane, 2011)


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System Review ClickSoftware Payroll System

CLICKSOFTWARE® Payroll System is a comprehensive, easy-to-use solution which includes all the payroll functionality needed by any organization to process payroll accurately and quickly, every time. The robust functionality of ClickSoftware Payroll makes it easy to produce pay slips on demand and make last minute changes with no hassles. It’s easy to meet the needs of your unique organization with flexible features including multiple shift definition, rate definition, taxes, and deduction types, multiple user-defined pay groups.


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System Review Hillstone Software

From this review system of Hillstone Software, the developer makes it as reference in term of its menu which is include admin site, staff, company, reports, phone list, option, register, about help and exit. There are very important in order to develop the system as menu is work as backbone for each system that will develop. Instead of that, the developer also make this system in term of its functionality button which is new, save, print, export, delete, holiday and close.


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System Review Medlin Payroll Software

For this review system of Medlin Payroll Software, the developer has been made it as reference in term of the details of information of each textboxes for employees payroll form. For this employee payroll form, there are many that consist of employee basic information, salary details, and period part information. In addition, to make it more details, this system has provide employee name, regular hours, overtime hours pay period to fill up and the salary will auto calculate by the system


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2.10 System Review Georgetown Cleaning Service

Employee Payroll page

Consequently, the developer has been chose the review system of Georgetown Cleaning Service Employee Payroll page as references and put as literature review. This system has different way to produce their employees’ salary as it put their details about payroll time frame through calendar, time value. Hence, it will automatically calculate the net pay by click the button calculates as below.

Figure 2.7 Georgetown Cleaning Service Employee Payroll page (Georgtown Cleaning Software, 2007)


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2.11 Conclusion

The system will be developed and completed for the users, comprehensive for users who aim to use the system with understandable, user friendly and universal, and have a quick response time. In order to develop the system, developer needs to do research and find out the references through article, magazine, and example of software in order to ensure the accuracy and reliability of the system.

In fact, the development of project system would be based on these good qualities, which is to build a system that is easy to navigate with a pleasing interface, to allocate the features and functions of the system and label each so that users will know how to use the system without any error occur.

Instead of that, the developing of project also need to adapt with the Principle of the Accounting as the system related to producing calculating of payroll and profits of company. It is because to ensure the accuracy and quality of system.


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The chosen methodology of this project is the prototyping model. There are several stages need to follow in order to use the prototyping model. The stages of prototyping model consist of initial analysis, define the objectives, specify the project, construct and evaluate. If there are any requirement that not fulfill as resulted from the evaluation, the developer need to redo the stage of specify and construct again until the users satisfy with the development system.


Development Approach

The development approach proposed is using prototyping model as it is attempts to reduce inherit project risk by breaking a project into smaller segments and providing more ease of change during the development process. In brief, prototyping is also not sophisticated and not expensive.

Prototyping involves user throughout the development process, which increases the likelihood of user acceptance of the final implementation. Each time a new prototype is released, it is usually enhancement of the previous one. This approach consists of five main steps which are initial analysis, specify prototype, construct prototype, evaluate prototype and repeat that step if any changes during evaluate.


Prototyping Model

Prototyping is the process of building a model of a system. In terms of an information system, prototypes are employed to help system designers build an information system that intuitive and easy to manipulate for end users. Prototyping is an iterative process that is part of the analysis phase of the systems development life cycle.


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3.2.1 Gather initial Requirement

During perform this phases, the system developer will gather information about the organization's current procedures and business processes related to the new proposing computerize system which is Payroll and Profits System. In addition, the developer has studied the current information system, if there is one, and conducts user interviews, doing observation, online research and collects documentation. This stage will help the developer to collect initial set of system requirements from the users.

In the other while, through this stage, after the developer collecting the raw data that need for this project through fact finding technique, the developer will analyze all the collection of data. For example, developer needs to review the requirement that has been state by the user toward this project in term of functionality and interface design of the Payroll and Profit System. For this project, the developer need to clearly state the objective in term of provide high functionality of system, control the data redundancy, improve data consistency, product have increase the concurrency and data shared, product have efficient in data access, product have backup and recovery.