Chapter 8 - Employee costs Flashcards
What are the risks when paying employees?
- Pay wrong amount
- Pay someone who’s left
How should employee be paid?
- Only paid for work done
- Gross and net pay correctly calculated
What controls are possible when paying employees?
- Staffing
- Segregation of duties
- Maintenance of personal records
What are the tests of controls for paying staff?
- Check changes have been correctly authorised
- Check calcs
- Cross ref with personnel records
What are the risks when recording salaries?
- Incorrect recording
- Variance between amount paid and cash in bank
- Incorrectly recorded in nominal ledger
What are the controls implemented for recording salaries?
- Bases for compilation of payroll
- Procedures for dealing with non-routine matters
- Scheduled maintenance of employee personnel records
- Reconciliations
What are the tests of controls for recording salaries?
- Reconciliations with previous data
- Assurance providers check calcs
- Check payments to HMRC
- Scrutinize nominal ledger accounts
What are the controls on cash payments of salaries?
- Controls over custody of cash
- ID verification
- Recordings of cash distro
What are the tests of controls on salaries paid with cash?
- Attend in person to ensure correct procedures followed
- Compare payroll with wage packets
- Examine receipts
- Check entries in unclaimed wages book
Which internal control is most likely to prevent fictitious employees from being added to the payroll?
Use of hierarchical passwords over standing data files
What control activities reduce the risk that the different elements of pay
might not be recorded correctly in the payroll?
One for one checking of payroll details back to independently maintained personnel records
Reconciliation of total pay and deductions between one pay day and the next
