Task 3: Payroll Flashcards
A written record such as contract of employment is kept for each employee containing details of rates of pay and contracted hours.
any changes require appropriate authorisation
Could be changed in error - Incorrect pay calculation
(eg OT hours)
Could be changed deliberately to defraud.
Pay for work not done or at wrong rate.
Formal procedures are followed for starters & leavers
Paying people who are not employees. ie have left the company.
Failure to pay new people
Payment of ghost workers
Timesheets and clock cards are approved before hours are entered onto the payroll system
Could pay for hours not worked.
Deliberate or error.
Access to payroll office is restricted to authorised personnal only
Data protection/ Confidentiality
Access to payroll and staff records is restricted to authorised personnel only
.
All changes to rates of pay, bonus payments and commission should be authorised
.
Written approval from employees should be obtained for all voluntary deductions
.
All timesheets to be added up to ensure accuracy
.
Up to date versions of payroll software should e installed using latest tax and NI rates
.
Staff are fully trained on PAYE and NI issues (and software)
.
Changes to staff Tax Codes are promptly and accurately on the payroll system
.
Payroll schedules are approved before payment
.
Wages control account is regularly reconciled
.
Commissions & Bonuses are reconciled to source documants (eg sales records)
.
Piecework payments are regularly reviewed against levels of work completed
.
Unusual changes in payments to individuals from month to month are identified.
.
Remember incorrect amounts paid mean lower profit and bad data used for costing
.
A timetable for payment of wages and salaries is maintained and adhered to
.
Staff who count wages in cash are not those who prepare payroll
.
At least 2 staff handle cash for wages
.
Cash for payment of wages is stored securely at all times
.
Payslips are handed to staff personally or sent to home address
.
Paypackets can only be signed for by the individual staff member
.
BACS payment schedules are authorised by an appropriate person before processing
.
A comparison is made between wages paid and budgeted figures for wages by department
.
A regular check is made of deductions by accounts staff to ensure consistency with previous period deductions
.
Reconciliations are regularly performed between the total net pay figure and payment shown on the bank statement
.
A regular review of NI and PAYE accounts to ensure no outstanding balances remain after payment to HMRC
.
AAT P2
Company operating 2 payrolls
Increases costs by doubling work (running 2 payrolls)
Increases time taken to make extra RTI submissions to HMRC
(So don’t worry about getting 2 marks for essentially the same problem ie. extra time!!)
AAT P2
Use of non-standard payroll software
This does not link to
If direct deposit is not utilized, someone not otherwise involved with payroll should hand out checks. Any unclaimed checks should be investigated.
Prevent fraud
5.8. Financial reporting cycle
The most perfect cycle-specific control system can’t guard against errors and control overrides by management. The following controls help protect against misstated financial reports, and they are at least partially linked to all main accounting cycles presented above.
Formal reviews should be in place over journal entries. For example, if a staff accountant prepares an entry, the controller should review and approve it. If the controller prepares an entry, the CFO should review and approve it.
Financial statements and management reports (e.g., budget to actual) prepared by the accounting system should be reviewed for reasonableness. A monthly financial review by executives and perhaps the board of directors is also a good idea. Frequent high-level reviews can detect unusual trends that might indicate mistakes or fraud.
A company should have written policies about any significant accounting treatments, such as revenue recognition and fixed asset capitalization. These written policies help to assure that accounting treatments are consistent throughout the organization.
.
An independent member of staff should review the list of employees and approve the net pay list
to check they are all real people and not ficticious.
also checks amount correct and going to correct person
check s theres been no collusion
