November 3, 2014
Assignments From the Text
Shortcomings are contained in the payroll procedures at the Galena plant. First, actual hours are not being approved by supervisors in the production department. Second, the payroll clerk has too many responsibilities, indicating a severe lack of segregated duties. Lastly, the personnel employee should not be responsible for accessing payroll checks, or guarding those checks prior to their delivery.
In order to improve the internal controls and repair the shortcomings of Galena’s payroll procedures, the following changes need to be implemented. Supervisors should be responsible for approving employee time cards, and a signature should be required of each employee before the are submitted. Segregation of duties should be implemented between two payroll clerks. One that prepares the information that needed to be processed through payroll, and the other to reconcile time cards at payroll register. The authorization of reissuing and voiding checks should not fall on the payroll clerk. This type of approval needs to come from the upper management of Galena. The accounting department’s responsibilities should include the safeguarding of employee payroll checks.
Irregularities and material errors can be the result of the shortcomings contained in the payroll procedures at Galena plant. Material weakness is represented through the lack of segregated duties. Errors, irregularities, and falsified information could occur from the payroll clerk. In addition, there are also irregularities with the procedure used to issue manual replacement checks and voiding computer-generated checks that may go unnoticed.
1. Are pay rates, payroll deductions, and terminations authorized by the personnel department?
No. The pay rates can change without authorization, deductions can be incorrectly calculated, and terminated employees have the possibility of staying on the payroll.
Inquire about and observe procedures for authorizing pay rate changes, confirm deductions through information provided by the IRS, and review terminations to ensure that ex-employees are not receiving payment for employment.
2. Are time clocks and clock cards used?
Employees could be compensated for the wrong number of total hours worked. Be mindful of watching employees clocking in and out of the building.
3. Is there supervisory approval of time worked by…