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Chapter 1

INTRODUCTION

Information technology is a modern phenomenon that has dramatically

changed daily lives of individual and business throughout the world. Computers

and information system are essential parts of every business today. Like

accounting and legal, every business needs to invest in technology to compete. It

is the application of computers and telecommunications equipment to store,

retrieve, transmit and manipulate data, often in the context of business or other

enterprise. Moreover, with looking to the term of business relationships, in 2002,

Carr & Smeltzer (2002) explained information technology as the use of automated

purchasing systems, supplier links through electronic data interchange, computer-

to-computer links with key suppliers and finally systems of information. And also

term information technology includes any computer application and required

packages of hardwares. Computer Aided Manufacturing, Computer Aided

Design, Electronic Data Interchange and Enterprise Resource planning that

positively affects the productivity of cooperation.

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In the sense of treasury management, payroll plays a major role in a

company for several reasons. Payroll consists of the process by which a business

pays its employees for work performed during a specific period. A payroll system

allows businesses to follow a set series of processes in order to make timely,

correct payments in compliance with government regulations. A payroll system

may be manual or computerized and handled in-house or outsourced to another

provider.

Based from the recent survey more than half of the businesses polled

stated, that the most common payroll errors in payroll management

were organizational consistency in the payroll process, over and under payments,

as well as many other areas. While up-to-date software can enable HR, payroll,

and employee data to be less overwhelming, if storage and processes are not well

organized, you are open to errors. And this can back up your payroll department

back by several days.

The electronic and computerized Payroll System and at the same time

information management system will not only offer exact calculations and

accurate data of designated employees but it will also implement security

measures and confidentiality of the files and accordingly arrange documents

provided. With the aspiring technologies been thought up today, this minimize the

burden and heavy loads of labor of the employees designated in the human

resource management office of a certain company or institutions.

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Payroll management system consists of the process by which a business

pays its employees for work performed during a specific period. A payroll system

allows businesses to follow a set series of processes in order to make timely,

correct

payments in compliance with government regulations. A payroll system may be

manual or computerized and handled in-house or outsourced to another provider.

The payroll process typically includes calculating employee pay, recording

payroll transactions and determining and paying payroll taxes. A company must

have in place a timekeeping system that accurately reflects the hours put in by

nonexempt employees as well as the regular salary payments for exempt workers. 

This plan will helps a lot in such a way that it makes work more

progressive and productive. It is an important thing that a company or small

business should have.

Background of the study

The origin of the name Our Lady of Angels Multi-Purpose Cooperative

(OLAMPC) is in the church where it is located named Our Lady of the Angels

Parish Church. The founder is a priest whose name is Monsenior Adelino

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Imperial and the first man who managed named Minandro Pareja. The source of

this is that of 18 friends, one of them needed money. So, he owed his friends.

Because of this, friends have come up with an idea to create an organization that

will lend a helping

hand to people. It was in the year of 1968 and already had an various members

because it is the time when many people need such an organization that become

one of their support to escape from poverty. Until, it had an own store and water

station which built by Antonio Reyes. Joining OLAMPC will receive “balik

tangkilik” or a discount whenever you buy in their store.

The OLAMPC has a 13 employees in the office and 10 in the store and

water station. The employees who are working there also have other deduction

like SSS, Phil Health, Pag-ibig and other government taxes. The process of

OLAMPC’s manual system to organize records for their employee’s of each

department for their payroll system. Still having a manual system can prove

useful, but as for a country in which effectiveness and time is a golden factor.

Because of manual system it consumes a lot of time than usual, due to

modernization today, effectiveness of a system they are using makes it hard for

the accountants to effectively search, edit, and produce reports through a vast

amount of data. Errors in computation of payroll are most likely to happen, since

the payroll officer that is assigned is prone to make some mistakes in computation

because the computation system being manual.

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Researcher’s motivation on OLAMPC’s existing system is to improve it,

secured the backup files and records. Because, this factors will lead to faster,

shorter and lessen of processes and organized of important data.

Statement of the problem

The proponent’s interest to conduct an investigation has led them to

understand the payroll system of OLAMPC present problems:

1. What are the common problems encountered by the accounting staff for

using manual system in processing payroll and time keeping?

2. What are the causes of delay? Was there an instance that have delayed

salary distribution?

3. What are the conflicts met by the staff in manually updating the records of

employee’s information?

4. What are the things needed in keeping the employee documents?

Objective of the study

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To develop a network-based payroll system for OLAMPC, that is user-

friendly, more accurate, more efficient, and can easily produce reports of the

transactions faster. In order to fulfill our objectives, the researcher will observe

the following:

 To help the OLAMPC and the employee to make their work faster and

shorter.

 To implement the system by equipment conversion, file conversion and

system conversion.

 To secure the records of employees and to have more manageable file

 To summarize all deducted contribution of employees

 To develop a system that will improve the company’s process in the

timekeeping and payroll.

 To develop a system that will monitor employee’s data that is efficient to

use

Significance of the study

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To the management

OLAMPC will greatly benefit with the proponent’s system because this

will help them to have better service, to update their record easily and this can

also keep track of the performance of their employee.

To the employees

The Employees will benefit in the system. They will find it easier to

transact about their records since searching in the system is faster than tracking in

the record book or log book. The biometrics will give them an easier time with

their time log and they don’t have to worry about losing their time cards because

it is not necessary.

The department head will benefit from this system because of this will

make checking of employees, their payroll, and even attend to their needs in case

of problems.

Human Resources Personnel managing the time keeping will not be the

same again as they will experience relieve. It would be fast and easy for them to

handle transactions such as report making and monitoring time entries. Further

determining or computing the payroll manually will be eliminated that will lead to

faster transaction.

Accountant will able to manage employee services, hours, pay rates. An

automated time and attendance employee system also helps in implementing and

enforcing fair pay policies. By using the Security, Time Keeping and Payroll

System employee software, actual balances, and flexible labor distribution for
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projects and work orders can be maintained. Other benefits of the time and

attendance employees’ software include the elimination of time cards and

unauthorized overtimes

To the students

The proponents will gain knowledge about the business system existing

inside a Finance office, with this; skills in system analysis will be improved and

also it helps the future researcher to have an idea about payroll system and

develop their own system. They can learn about the proponent’s system and at the

same time develop a greater system with the help of the proponent’s study.

Scope and Limitation of the Study

Many employers use a timekeeping system, such as clock time, to track,

work hours employees. Can separate this system regular hours from overtime

hours worked. The scope of the study covers the individual information of the

OLAMPC employee’s. It includes the generation report in the backup files such

as employee and salary record. The system focuses in processing of payroll

system of the employee’s. Its concern is the computation of employee’s salary

and produce report needed by the accountant especially on each employee’s

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payroll. It secured also with log-in and log-out from the proposed system and

which can be access only authorized person. It has maintenance for record of

employee and salary which can be maintained by adding, deleting, updating all

the needed transaction in the system and may the employee can see his/her own

standing of their performance anytime and it will compute the proponents system

the payment such as their deduction and bonuses.

The study does not cover any other not employee of the OLAMPC .This is

not a group pay slip. This system is not cover by any deduction that may not

belong

to the pay slip. And also the other income that not belong in OLAMPC.

Definition of terms

Accounting Staff- they maintain the financial reports, records and general

ledgers; prepare and analyze budgets.

Biometrics- techniques that will rely on measuring and holding the physical

characteristics that can be automatically checked by the employee.

Computer software- set of instruction and its associated documentations that

tells a computer what to do.

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Department head- the person who is in charge and the head of the whole

operation.

Human resources personnel or HR is the company department in charged with

finding, screening, recruiting and training job applicants and administering

employee-benefit programs.

Income Tax- is a government levy (tax) imposed on individuals or entities

(taxpayers) that varies with the income or profits (taxable income) of the

taxpayer. Details vary widely by jurisdiction. Many jurisdictions refer to income

tax on business entities as companies tax or corporation tax.

Manual Payroll System – means calculating the payroll by hand. It does not

require an investment in payroll software.

Pay slip- a slip of paper included with your pay that records how much money

you have earned and how much tax or insurance etc. has been taken out.

Salary Computation - means computing salary base on employees attendance

and contribution.

Work Hours- is the period of time that an individual spends at paid occupational

labor. Unpaid labors such as personal housework or caring for children/pets are

not considered part of the working week. Overtime hours- is the amount of time

someone works beyond normal working hours. Normal hours may be determined

in several ways.
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Conceptual Framework
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REVIEW ON RELATED LITERATURE AND STUDIES

This chapter deals with a review of related literature and studies to have

significance to the present study. Though this chapter, the readers can

familiarize with the study of the proponents. The related and previous studies

presented in this chapter would give the readers and future researchers an idea

of the proposed system.

Local Studies

As studied by Olivar (2010), “Payroll System is heart of Human Resource

System of an Organization”. The solution has to take care of calculation of the

salary as per rules of the Company, Income-Tax calculation and various

deductions to be done from salary based on the daily time record using the

“Biometric Attendance Record System” including statutory deductions like

Income Tax and Provident Fund deductions. Another study, the main focus of the

system should handle employee’s records such as Employee List, Add New

Employee, Edit New Employee, Attendance, Bonus and Pay slip for the

administrator.

Alvarez, Aldrine and Gecolea of Krizalen (2014) studied using a biometrics

with online data analytics dashboard to give krizalen enterprises an efficient

payroll system that can automatically monitor the attendance and trip tickets of

the employees, drivers and helpers with the biometrics technology and data
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analytics that would help them in the security and accuracy of the company

payroll and information. Summing up the past situation of payroll inside krizalen

enterprises, there was need for a system that could help them with employee

information management attendance, monitoring, payroll processes, and

assistance for the manager decision making. With this idea, the proponents

conducted a study for the development of software that can minimize data

redundancy, inconsistency, and manipulation. Employees can view their current

pay and review their information from the database. And with updating of the

reports that can be viewed through the internet, the manager can view the recent

activities within the proposed system.

As a study of Santos (2014) The system will only cover Automated

Attendance process which includes verifying their registration through Student

ID, selecting and review their chosen candidates and produce automatic result

after the last constituent votes in a cut-off time of voting. The System was

programmed using MS VB 6.0, MYSQL and CS2 Photoshop in making the

interface. The system needs only a computer and runs through the system under

Windows XP or Windows 2000 and Windows Vista. In order to implement the

system, the school must provide an estimated of 11 computers to be able to

accommodate, manage and organize the election process.

In relation to this study, the proponents of Automated Attendance

System have a capability to minimize error and provide an efficient and secured

tally of the records that stored on database. As researcher, the study helps us to
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develop our programming capabilities, system analysis and database designing

and able us to formulate and provide solution to situational problem.

As the study of Luisa (2011) all employees are required to present their

enrolled fingerprint in the Biometric Terminals every time they go in and out of

the campus. In cases when an employee’s fingerprint is not recognized by the

Biometric Terminals, he must immediately proceed to the HRD to log his time

entry in the HRD Attendance Logbook and to re-enroll his fingerprints The HRD

shall provide full-time employees with an automated timekeeping report every

16th and 1st day of the month. The Biometric Timekeeping System implemented

beginning on March 16 2011. It is suggested that personnel from each office

attend the Orientation in separate batches so as to minimize effect on operations.  

In relation to this study, the developers will also use Barcode scanner to

access the system and present time is needed for the log in and log out process.

Both the developers of the MMCA Events Attendance and Voting system will

provide authorized person to be the admin of the software.

Local Literature

According to Mayor Jun Bernabe on the article Planet Biometrics, In

August 2011 Parañaque City, Philippines has replaced its existing biometric

machines with a new fingerprint biometric attendance registry system, which it

says is more user-friendly and efficient. The city’s mayor, says the new
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attendance machines will enable it to resolve the issues of long queues as well as

employee complaints. A total of 40 Model 628 Double Engine ZK Finger Print

Stand Alone Time Recorders were purchased. City hall took 15 units while the

rest were installed in other local government facilities.

The upgrade was jointly run by the city government’s Human Resource

Management Office and the Electronic Data Processing (EDP) Office. “Aside

from cutting manpower downtime, it makes timekeeping and payroll preparation

simpler, systematic and more accurate. It also provides an additional way to

identify, discipline and fire habitual later-comers, absentees and ghost

employees,” says Mayor Bernabe. According to the article mentioned above, with

the use of biometric fingerprint scanner in the attendance system of the

organization which is also connected to the payroll system. Saves time in lining

up in the Bundy clock.

Aguilera, Bronzas, and Marqueses claimed that the great payroll is really

one of the most important issues to pay attention in almost every company. It is

impossible to handle payroll responsibilities with a pen, ledger sheet and

calculator, but nowadays it is more convenient for most companies to use

computerized payroll software. The schools is also not exempted in using a

payroll system namely the study of payroll system for the teachers and staff of

Liceo De Calamba.
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Maligaya, Opeña and James Jordan (2010) viewed that Liceo de Calamba

aims to provide high quality of education for their students and to establish great

relationship with their employees by providing them with the right and

appropriate benefits they must enjoy as population of Liceo de Calamba increases,

its system must perform competitively, Payroll system is needed in order to have

an accurate and error free in their payroll process and services. So to say, the

schools is also not exempted in using a payroll system namely the study of payroll

system according to the teachers and staff of Liceo De Calamba..

According to Frialde (2014) the developers are intending to harnessing

technology to promote transparency and efficiency in its operations and services.

Aside from ensuring the accuracy of daily time records and thwarting attempts of

time theft, the new timekeeping system also promotes fast and efficient payroll

calculations. It is said that with the use of system it can eliminated the possibility

of employees making ‘proxy’ time-in or time-out for other employees.

In relation to this literature, the developers will also use biometric on

monitoring the votes of the voters. Electronic Voting System will also show the

efficiency of using biometric in a process.

Foreign studies

In the study conducted by Aishwarya Gupta in (2013) AMITY University

UTTAR Pradesh that develop a system entitled with employee payroll system.
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According to the researcher Employee Payroll system is an application that

enables users to create and store Employee Records. This application also

provides a facility which enables an administrator or an employee to generate a

Pay slip. This application is helpful to the organization as it maintains data of

employees related to that organization. Accuracy in payroll calculation is

necessary in every company. It requires efficiency to pay employees the right

amount of money they have earned, reliable backup, keeping large amounts of

data for payroll can be challenging. This application stores your data in the

database of your system because you can’t store piles of papers and data

manually, it can be easily handled by the person who has basic knowledge of

computer because it provides a user friendly environment, its hardware and

software configuration is not very expensive.

According to the study of Johnson (2010) it is a software-based time and

attendance system that allows the user to collect and organize employee time data

simply and accurately. You can use Time Force to easily and efficiently track

your employee time, manage your time & attendance data and employee profiles,

eliminate buddy punching, make employee scheduling a breeze and reduce the

headaches and time associated with payroll. Best of all, Time Force can quickly

pay for itself in time savings reduction of time theft and elimination of payroll

errors. Time Force is the manifestation of 10years of experience, customer

feedback, and research and development in the time and attendance market.

Over35, 000 businesses use Time Force.

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Watson (2011) in his study revealed that it offers more accessible, fast and

efficient way to enhance Log-in Log-out Using Biometrics Finger Prints Reader.

By using ESVES biometric system for security and database management the

employee can Log-in and Log-out by Pointing Thumb finger and Index finger.

Foreign Literature

According to Grover in (2013), researchers in Nyanmaru Computerized

Payroll System. Nowadays all establishment are becoming modernized, they use

modern technologies to make their transaction fast, easy, and accurate in order to

avoid waste of time and for the sake of safety and security. It also helps human to

solve and understand complex problem and analysis such us the computational

need of humans. Especially to business establishment or corporation processing

enormous data and complex transaction. Payroll is an example of a complex

transaction because it is a critical business operation dealing with numerous

accounts and produce plenty and confidential files. Payroll is encompasses every

employee of a company who receives a regular wages or other compensation due

to each. Applying manual procedure on a Payroll transaction involving the vast

beat answer in that problem would be computer because computers can simulate

enormous data and can process complex transaction in a fast and efficient way.

It can generate numerous accounts and data accurately. A Computerized

Payroll System will not only provide accurate calculation and fast process of

Payroll transaction but it will secure data through security.

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Also related study of Amrit Kadam (2014) are include the study entitled

College Payroll System & Taxation the purpose of this study is to aim of

developing Employee Payroll Management is to provide an easy way not only to

automate all functionalities involved managing leaves and Payroll for the

employees of College, but also to provide full functional reports to management

of College with the details about usage of leave facility & even deduction of

income tax & related taxes can be done by this system. Payroll system is the heart

of any Human Resource System of an organization. The solution has to take care

of the calculation of salary as per rules of the College, income tax calculation and

various deductions to be done from the salary including statutory deductions like

Income tax and provident fund deductions. It has to generate pay-slip, cheque

summary and MIS reports. It is understood that we are tired of managing

thousands of odd papers, pay slips, payroll reports, and salary details and so on.

Imagine that we have a payroll processing system which will generate our pay

slips and payroll reports within seconds. We can help others automated your

payroll system by developing a customized payroll application that suits your

specific requirements.

According to Shoewu, Makanjuola and Olatinwo (2014 ) the use of

biometric technology in attendance management cannot be overemphasized.

Biometric is an automated of recognizing a person based on physiological or

behavioral characteristics .Biometrics is used for objective identification and

verification.
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Every Nigerian university has the obligation to record and take student

attendance every event. The accuracy of this record of attendance as important as

it is have been marred by many challenging problems which ranges from the

cumbersome nature of the paper sheets used in recording, manipulation of the

attendance record by fraudulent students, emplacement of the attendance records

after taking them and so on.

The developers use fingerprints technique. It has been observed that human

beings have been using fingerprints for recognition for a long time, due to its

simplicity and accuracy.

In relation to this literature, the developers will also use biometric

technology to assure that individuality of each student is accurate. It is important

to save the information of the students.