Chapter 8 Employee costs Flashcards
1
Q
8.1 Introduction to the employee costs system
A
Calculating wages and salaries is a function of standing data and variable data. Standing data is the information in the employee costs system that doesn’t vary regularly (hourly rates, salaries). Variable data includes hours worked or overtime as recorded on timesheets. In addition to calculating the amounts paid to staff, an employee costs system calculates payroll taxes to HMRC.
Key risks Key control objectives Controls activities Calculation of wages Employees paid incorrectly; employees paid after leaving the business Employees only paid for work done, gross and bet pay correctly calculated Regular checks of wages to personnel records, authorisation of changes to standing data, compare payroll to budget Record wages and salaries Gross and net pay incorrect, deductions incorrect resulting in HMRC penalties Record gross and bet pay correctly, pay the correct amounts to HMRC on time Payroll reviewed by an appropriate manager, reconcile pay to previous months, agree gross earnings, and total tax deducted to tax returns Pay wages and salaries Payments to bogus employees, payments incorrect Pay the correct amount to actual employees Segregation of duties between maintenance of personnel records and payment of staff, maintenance and reconciliation of wages and salaries nominal ledger account
