Employee Costs Flashcards
The following system of time records exists at Shepherd Limited. Staff members are required to fill in a manual timesheet as they arrive, stating the time of arrival and as they leave, stating the time of departure. Staff members are then paid an hourly rate on the basis of this record.
Which two of the following outcomes could arise from this system?
A. Employees may be paid at an inappropriate rate
B. Employees may be paid for work they have not done
C. Employees are paid for the hours they have worked
D. Employee deductions may be inappropriate
B and C
Personnel and wages records at Simonston Brothers Limited are maintained by Sam, the wages clerk, on a personal computer. Sam calculates hours worked by each employee on a weekly basis, based on employee’s clock cards and enters them on the computer. The payroll program, using data from personnel records in respect of wage rates and deductions, produces the weekly payroll and payslip for each employee.
Sam uses the payroll to prepare the bank transfer list, which he sends to the company accountant. The accountant signs the transfer list and has it countersigned by a Director. The wages clerk then processes the bank transfer on the computer.
Which two of the following are deficiencies which exist in the wages system at Simonston Brothers Limited?
A. Sam records the salaries and organises the payment of wages
B. There is no review of the payroll
C. The bank transfer list is countersigned by a Director
D. The payroll and the time recording system are separate
A and B
Which two of the following control activities with reduce the risk of employees who have left being made up a pay packet which is collected by the leaver or an accomplice?
A. Check that each employee only collects one pay packet
B. Supervision of payout by member of staff who knows all the employees personally
C. Authorisation of payroll
D. Comparison of payroll with wage packets to ensure that they match
A and C
Does this process indicate a strength or deficiency of the system?
Employees each have an electronic card to swipe in order to enter and leave the factory premises. This ‘swipe’ system automatically updates time records in the payroll system
Strength.
Cannot access work without updating their hours on their payroll
Does this process indicate a strength or deficiency of the system?
There is no personnel department. Employees are engaged by department heads with the verbal consent of a Director.
Deficiency
This is a very casual recruitment process and does not necessarily have any written documentation resulting from the appointment of an employee. Could lead to errors in pay rates and payroll production that could be eliminated if written notice of an employees’ start was given to the payroll department
Does this process indicate a strength or deficiency of the system?
On leaving, employees are required to return their swipe cards.
Strength
This means that employees are then excluded from the time recording system, so in practice cannot continue to be paid after they have left.
The payroll has a variance function which reports items within the payroll falling outside the expected conventions which must be resolved by an authorised member of staff before the payroll can be finalised. The ability to resolve this report is controlled by a secret password.
Strength
The fact that payroll has parameters beyond which it seeks authorisation means that mistakes should be corrected before the payroll is finalised. In addition, there are application controls over correction of the payroll, strengthening the control.
