Chuggeley assembles specialist motor vehicles such as lorries, buses and trucks. The company owns four assembly plants to which parts are delivered and assembled into the motor vehicles. The motor vehicles are assembled using a mix of robot and manual production lines. Workers normally work a standard eight-hour day, although this is supplemented by overtime on a regular basis as Chuggeley has a full order book. There is one shift per day; mass production and around the clock working are not possible due to the specialist nature of the motor vehicles being assembled.
Wages system - shift-workers arrive for work at about 7:00 am and 'clock in' using an electronic identification card. The card is scanned by the time recording system and each production shift-worker's identification number is read from their card by the scanner. The worker is then logged in as being at work. Shift-workers are paid from the time of logging in. The logging in process is not monitored as it is assumed that shift-workers would not work without first logging in on the time recording system. Shift-workers are split into groups of about 25 employees, with each group under the supervision of a shift supervisor. Each day, each group of shift-workers is allocated a specific vehicle to manufacture. At least 400 vehicles have to be manufactured each day by each work group. If necessary, overtime is worked to complete the day's quota of vehicles. The shift supervisor is not required to monitor the extent of any overtime working although the supervisor does ensure workers are not taking unnecessary or prolonged breaks which would automatically increase the amount of overtime worked. Shift-workers log off at the end of each shift by re-scanning their identification card.

Payment of wages Details of hours worked each week are sent electronically to the payroll department, where hours worked are allocated by the computerized wages system to each employee's wages records. Staff in the payroll department compare hours worked from the time recording system to the computerized wages system and enter a code word to confirm the accuracy of transfer. The code word also acts as authorization to calculate net wages. The code word is the name of a domestic cat belonging to the department head and is therefore generally known around the department. Each week the computerized wages system calculates:
(i) Gross wages, using the standard rate and overtime rates per hour for each employee
(ii) Statutory deductions from wages
(iii) Net pay.
The list of net pay for each employee is sent over Chuggeley's internal network to the accounts department. In the accounts department, an accounts clerk ensures that employee bank details are on file. The clerk then authorizes and makes payment to those employees using Chuggeley's online banking systems. Every few weeks the financial accountant reviews the total amount of wages made to ensure that the management accounts are accurate.
Termination of employees Occasionally, employees leave Chuggeley. When this happens, the personnel department sends an email to the payroll department detailing the employee's termination date and any unclaimed holiday pay. The receipt of the email by the payroll department is not monitored by the personnel department.

Salaries system - shift managers All shift managers are paid an annual salary and there are no overtime payments. Salaries were increased in July by 3 per cent and an annual bonus of 5 per cent of salary was paid in November.

Required:
(a) List four control objectives of a wages system.
(b) As the external auditors of Chuggeley evaluate the wages and salaries system:
(i) Identify and explain FOUR weaknesses in that system.
(ii) Explain the possible effect of each weakness.
(iii) Provide a recommendation to alleviate each weakness.
(c) List three substantive analytical procedures you should perform on the shift managers' salary system. For each procedure, state your expectation of the result of that procedure.
(d) Audit evidence can be obtained using various audit procedures, such as inspection. Apart from this procedure, in respect of testing the accuracy of the time recording system at Chuggeley, explain four procedures used in collecting audit evidence and discuss whether the auditor will benefit from using each procedure.