13.7 please

13.7 Table 13.3 (page 602) identifies three risks typically encountered when updating the general ledger Required (a) Analyse the degree of exposure to each of these risks for the update the general ledger process at AB Hi-Fi. update general ledger process at AB Hi-Fi. the update the general ledger process is, and how comprehensive the current internal (b) Determine how many of the common controls described in table 13.3 are present in the (c) Prepare a short report suitable for senior management to explain how risky you think controls are (d) Prepare a recommendation describing any changes you would like to make to the update the general ledger process at AB Hi-Fi in order to reduce the level of risk. TABLE 13.3 Activities in updating the general ledger Typical risks encountered Usually conducted by Common controls Activity # Activity Activity description Batch totals and hash tota Using ledger control accounts that detail totals posted from each ledger and allow comparison of those totals Once processing in the subsidiary ledgers has been successfully completed, the revenue, expenditure, production, and HR management and payroll cycles send a notification to the financial cycle. The summarised details from all the subsidiary transaction systems created by these other cycles are then able to be extracted for posting into the general ledger. Incomplete data 2.1 Extract and validate data Computer InaccurateAutomated system exception datareports that identify any problems encountered during extraction and validation The verified summarised transaction data are posted to the relevant general ledger accounts. Once transactions have been successfully posted to the relevant accounts the transactions contained in the subsidiary ledger data stores are updated with a status code to indicate that they have been posted to the general ledger accounts. Inaccurate updating Batch totals and hash totals Regular control account reconciliations Computer 2.2 Post transactions AB Hi-Fi HR management and payroll process AB Hi-Fi is a multi-store retail business that sells products such as DVDs, CDs, mp3 players,gane consoles and TVs. In addition to retail stores, AB Hi-Fi sells music, games and DVDs via its we Much of the in-house processing for HR management and payroll relies on manual, paper-t systems. The narrative of the HR management and payroll process for AB Hi-Fi foll Phase 1.0 Employee recruitment AB recruits a wide variety of staff, including many part-time employees who work in their retail stores. AB has a standard formula to calculate staffing requirements at each of their retail stores based on employing one manager and two full-time sales employees for each store, and sutficert part-time labour to meet estimated demand based on the previous month's sales in that store. an analysis of sales indicates a need for a new part-time staff member, or an existing ful-time ff member leaves the organisation, the workforce planning division sends a request to h resources staff uma to commence a recruiting campaign. The recruiting officer searches the existing position descriptions and finds the position description that most closely matc hes the req The recruiting officer creates a search plan for the vacant position outlets they intend to use for the advertisements, the advertising copy to be media used, what kind of applications are expected (both volume and quality) and the expected costs of the advertising campaign. Once the search plan is complete, the recruiting officer forwards the plan and the associated position description to worktorce planning for approval. Workforce planning approves the plan, authorises the expenditure and returns the plan to the recruiting officer. On receipt of the authorised plan, t agency on the search plan and requests a positive placement dates, copy and costs. The advertising agency emails their invoice and a final proof of the advertisement prior to publication, which the recruiting officer checks against the origina the recruiting officer emails their prep vertising copy to each tisement advertisement. After the closing date for applications for the position, the recruiting officer downloads and out all applications submitted electronically.The recruiting officer checks each applicat against the key selection criteria contained in the position description, noting issues such as criteria not addressed by an applicant, or any applications which fail to provide evidence of mandatory skills required for the position. Once applications have been the recruiting officer, they print five copies of each application, and the report containing comments, and forward them to the chair of the selection panel. After the appl the selection process, the chair of the selection panel notifies the recruitment officer of the outcome of each of the applications. The recruitment officer sends an email to each unsuccessful applicant advising them that they are no longer under consideration for the vacant position. The successful applicant (or applicants) are sent an email advising them of the offer of a position and requesting that they contact the recruiting officer for further information. When the potential new employee contacts the recruiting officer, they are advised verbally of the details of the position offer being made (salary, starting date and employment terms and conditions) and asked if they wish to accept the offer. If an applicant does not wish to accept the offer or requires additional details, they are given the details of the chair of the selection panel and asked to contact them. Applicants who accept the offer are emailed a new employee details form which they are asked to complete and return to AB prior to their starting date for employment.When the recruiting officer receives the completed form from the new employee they print it out, thien use the details on that form and the selection committee's original outcome notification to create a new employee record, includin details of conditions of employment, applicable salary scale and their starting date and recording any checked by icants have undergone Phase 2.0 Payroll AB pays its employees time employee timesheets for the previous week through to the payroll officer. The ensures that the timesheets have been approved by the relevant store that the total number of hours worked have been calculated correctly. Once th sure that the total hours worked look correct they enter the total working hours for each fortnightly. Every Tuesday morning each store is required to send all part- payroll officer managers, and checks e payroll officer is employee em into the payroll system. The computer system.calculates the total amount due to each using the On every second Wednesday morning the payroll officer uses the comput fortnight payroll ly payroll. The payroll officer inputs an instruction for the computer to amounts due to and then calculates salaries payments due using the processing. The computer extracts the previously calculated details of wages employee details for each salaried employee. The amounts of tax and superannuation deducted from each employee's salary are calculated. Tax deductions are using a computerised PAYG tax to be automatically assessed I computer or wage due to the employee. Details of the y sent through to the accounts department, and mu s pay total payroll amount continued) individual payslips are generated and sent electronically to each employee. At 11 pm every second Wednesday, the computer automatically generates a file containing details of all salary and wage payments and deductions to be paid and sends it to AB's bank, which disburses the payment to the employees and third parties. A copy of the total payroll payments made is sent through to the accounts department Phase 3.0 Performance management Every full-time employee has their performance reviewed annually. Full-time sales employees are reviewed by the relevant store manager. Store managers are reviewed by the relevant regional manager. Part-time employees da not have their performance reviewed. To prepare for the performance review, the HR officer creaes a sary of data in total paid to the employee over the year, current leave balances due to the employee, and a brief description of any notes made on the employee file during the past year. The HR officer sends this information through to the relevant manager, and advises the employee via email that their annual performance review relevant manager advises the HR officer of the outcome ot the review by giving the employee a ranking between one and five, and indicating if any salary adjustment is required enters the performance review ranking for the employee and, if a salary adjustment is required updates the employee record to reflect the new salary level payable the employee file, including the is upcoming, After the performance review has been conducted, the Phase 4.0 Employee termination Employees wishing to resign from AB Hi-Fi are required to provide four weeks notice in writing of their intention to resign. Employees send their notice to the HR officer, who records the date that notice was given and the termination date requested on the employee file, then sends a copy of the written notice received through to the payroll officer and the relevant store manag On the designated last employment day for the employee the relevant store manager (or regional manager in the case of a store manager's resignation) is sent an automated email reminding them that they need to recover any store keys and identity cards issued to the employee