8 - Employees cost

Question 1

What are the stages of the wages and salaries system?

Answer 1

Calculation of wages, salaries and taxes
Recording of wages and salaries in the accounting systems
Payment of wages, salaries and taxes

Question 2

What are the controls in place when calculating wages salaries and taxes

Answer 2

Starters and leavers are authorised by senior managers or HR - ensures right people are paid
Time sheets or clocking in and out arrangements exist for those paid per hour - ensures right number of hours
Personnel files are maintained for all employees and are regularly reviewed to the payroll info - ensures correct pay
Qualified/trained staff calculate payroll. Restricted access to the payroll system and reliable software is used - ensures correct calculations

Question 3

What are the controls in place when recording wages and salaries in the accounting system

Answer 3

Payroll reconciliations performed using a control account

Question 4

What are the controls in place when paying wages, salaries and taxes

Answer 4

Segregation of duties between those preparing payrolls and those distributing payments.
For cash payments, identification should be provided prior to payment.
For BAC`s payments there should be a review and authorisation prior to payment by HR