Using the supplemental information below analyze the flowchart shown on the following page.

Required:

Identify and describe:

a. Areas in the payroll processing system where the internal controls are inadequate.

b. Two areas in the payroll system where the system controls are satisfactory.

Transcribed Image Text:

The personnel department determines the wage rate of all employees. Personnel starts the process by sending an authorization form for adding an employee to the payroll to the pay- roll coordinator George Jones. After Jones enters this information into the system, the computer automatically determines the over- time and shift differential rates for the individ- ual, updating the payroll master files. Employees use a time clock to record the hours worked. Every Monday morning. George Jones collects the previous week's time cards and begins the computerized processing of payroll information to produce paychecks the following Friday. Jones then reviews the time cards to ensure that the hours worked are cor- rectly totaled; the system determines overtime and/or any shift differential. All other processes displayed on the flowchart are performed by Jones. The system automati- cally assigns a sequential number to each pay- roll check produced. The check stocks are stored in a box next to the computer printer to provide immediate access. After the checks are printed, Jones uses an automatic check-signing machine to sign them with an authorized sig- nature plate that he keeps locked in a safe.