Week 8 Question (10 marks, maximum 300 words)
The following is the description of the payroll system of a
manufacturing company:
Employees of the company use a time clock in an unsupervised
area to record their time on the job. The site supervisor tries to
monitor the recording process. However, due to other duties, the
supervisor is often distracted. The site supervisor collects the
time cards from employees every Friday. The supervisor then reviews
and approves the time cards and send them to payroll clerk.
The payroll clerk uses a stand-alone workstation to record the
employees’ earnings in the employee records and print two hard
copies of payroll register. One copy of the payroll register is
sent to the accounting department and the other copy is filed with
the time cards in the payroll department.
The accounting clerk receives the payroll register, reviews it
for accuracy, and use the department computer to record the
transaction by posting to salary expenses, cash and various
withholding accounts at general ledger and subsidiary ledgers. The
clerks then prints the hard copy of pay cheques, which are written
on the general cash account.
The accounting clerk signs the pay cheques and sends them to
the site supervisor who distribute them to the employees. The clerk
then files the payroll register in the accounting department.
Discuss the uncontrolled risks associated with the company’s
payroll system.